PREPARATION, TRAINING AND SUPPORT REQUIREMENTS OF EXPATRIATE TRAILING SPOUSES

Transcription

1 PREPARATION, TRAINING AND SUPPORT REQUIREMENTS OF EXPATRIATE TRAILING SPOUSES By EMMA-LOUISE WEBBER Submitted in fulfilment of the requirements for the degree MCom in Business Management in the Faculty of Economic and Management Sciences UNIVERSITY OF PRETORIA STUDY LEADER: DR AJ VÖGEL SEPTEMBER 2015 The financial assistance of the National Research Foundation (NRF) towards this research is hereby acknowledged. Opinions expressed and conclusions arrived at are those of the author and are not necessarily to be attributed to the NRF.

2 DECLARATION I declare that the Master s thesis which I hereby submit for the degree MCom Business Management at the University of Pretoria is my own work and has not been submitted by me for a degree at another university. Student name: Emma-Louise Webber Month and year of submission: September 2015

3 ACKNOWLEDGEMENTS I would like to thank the following individuals and enterprises who have supported this research, without whose help this study would not have been possible: Most importantly, thank you Lord for getting me to where I am today, for giving me the strength to complete this research study, and for always keeping me focused on the end goal. To my darling husband, Jason, thank you for all your love, encouraging words and continuous support throughout this process. Thank you for patience and for always being my rock. Thank you to my supervisor, Dr Johan Vögel, for the guidance you have shown and for sharing with me the depth of knowledge that you hold in this field of study. Dr Marthi Pohl from the University of Pretoria, thank you for your help and guidance in the analysis and interpretation of the data. A huge thank you to all of the spouses who participated in this research. Thank you for sharing your knowledge and experiences with me. I hope that the findings from this study will encourage enterprises to give more consideration to the needs of trailing spouses in order to improve their adjustment and international experience. Thank you to all of the MNEs who were willing to assist me with this study. Without your participation, this study would not have been possible. Thank you for acknowledging how important research is to the development of our societies. Lastly a huge thank you to the NRF for their continued financial support throughout my studies. Your assistance is immensely appreciated!

4 PREPARATION, TRAINING AND SUPPORT REQUIREMENTS OF EXPATRIATE TRAILING SPOUSES by EMMA-LOUISE WEBBER Promoter: Department: Degree: Dr Johan Vögel Department of Business Management MCom Business Management ABSTRACT Globalisation has led to an increased need for MNEs to expand their operations and appoint expatriate managers in foreign countries. The failure of these expatriates has been identified as a major concern for multinationals, as failure rates range between 30 and 40 percent and may cost an enterprise up to US$1.2 million. Many studies have found the inability of the trailing spouse to adjust in the host country to be the most common cause of expatriate failure. As they are more immersed in the host-country s culture than the expatriate, spouses may experience severe culture shock, isolation, and stress, and need to come to terms with the various differences in healthcare systems, housing arrangements, cuisine, language and gender roles. The adjustment of the trailing spouse has been found to be significantly related to the success of an international assignment, making enterprise-assistance programmes essential. The aim of this study was to determine the preparation, training and support requirements of trailing spouses in order for MNEs to reduce the likelihood of failure amongst their assignees. A literature study was conducted in order to investigate the causes of failure and to identify best practices for the preparation, training and support of spouses accompanying expatriates on assignment. The literature study was then followed by an empirical study, in which a link to an online questionnaire was distributed through MNEs and online forums to trailing spouses currently on assignment. Spouses were required to answer demographic questions and give their opinion regarding various preparation, training and support requirements by

5 rating their level of agreement, on a four-point Likert Scale, as to whether or not they required any of the listed items for adjustment and whether or not these were provided to them by the enterprise. The data was then analysed using a factor analysis, Cronbach s Alpha, a t-test, paired t-test, an analysis of the mean scores and other inferential statistics. This study has revealed that enterprises are not providing expatriate trailing spouses with the preparation, training and support that they require, and has identified what preparation, training and support is required by spouses in order to adjust in the host country. Recommendations have been made based on these findings to assist enterprises in developing preparation and training programmes and providing adequate support to spouses prior to and during the assignment. It is important to remember that the key to expatriate success is the trailing spouse s adjustment. These recommendations should therefore enable MNEs to design and implement expatriate programmes and processes that take into consideration the needs of trailing spouses in order to reduce the likelihood of expatriate failure. Keywords: Expatriate; trailing; spouse; failure; preparation; training; support; requirement

6 TABLE OF CONTENTS 1 INTRODUCTION AND PROBLEM STATEMENT INTRODUCTION AND PROBLEM STATEMENT RESEARCH OBJECTIVES LITERATURE REVIEW AND HYPOTHESES Preparation Requirements Training Requirements Support Requirements RESEARCH DESIGN Degree of Research Question Crystallisation Method of Data Collection Type of Data Researcher s Control of Variables Purpose of the Study Time Dimension Topical Scope Research Environment CHAPTER OUTLINE ABBREVIATIONS REFERENCING TECHNIQUE 22 2 INTERNATIONAL HUMAN RESOURCE MANAGEMENT INTRODUCTION THE DIFFERENCE BETWEEN HRM AND IHRM THE STRATEGIC IMPORTANCE OF HUMAN RESOURCE MANAGEMENT Human Resources as Valuable Human Resources as Rare Human Resources as Inimitable Human Resources as Non-Substitutable Human Resources as Exploitable INTERNATIONAL STRATEGIES International Enterprise Multidomestic Enterprise Global Enterprise Transnational Enterprise 31

7 2.5. TYPES OF STAFFING POLICY Ethnocentric Staffing Policy Polycentric Staffing Policy Geocentric Staffing Policy Regiocentric Staffing Policy EXPATRIATES Sources of Personnel Parent-Country Nationals Host-Country Nationals Third-Country Nationals Strategic Role of Expatriates Duration of Expatriate Assignments Reasons for Accepting an International Assignment EXPATRIATE FAILURE Costs of Expatriate Failure Reasons for Expatriate Failure The Concept of Expatriate Failure Contested SELECTION Tung s Study Caligiuri s Big Five Personality Characteristics Mendenhall and Oddou s Dimensions Dowling and Welch s Criteria for Selection Expatriate Selection Procedures ADJUSTMENT Lysgaard s U-Curve Theory Bandura s Social Learning Theory PREPARATION AND TRAINING Training Cross-Cultural Training Language Training Practical Training ROLE IN DEVELOPMENT SUPPORT COMPENSATION Approaches to Expatriate Compensation 85

8 Elements in an Expatriate Compensation Package Expatriate Taxation International Compensation Problems PERFORMANCE APPRAISAL REPATRIATION Challenges of Repatriation Strategies for Successful Repatriation CHAPTER SUMMARY EXPATRIATE TRAILING SPOUSES INTRODUCTION ISSUES WITH EXPATRIATE TRAILING SPOUSES Dual-Career Couples Male Trailing Spouses Work-Family Conflict Crossover Theory PREPARATION REQUIREMENTS TRAINING REQUIREMENTS Language Training Cross-Cultural Training SUPPORT REQUIREMENTS Support Networks Employment Assistance Mentoring Programmes CHAPTER SUMMARY RESEARCH METHODOLOGY INTRODUCTION PROBLEM STATEMENT AND OBJECTIVES Problem Statement Research Objectives SAMPLING DESIGN Target Population Sampling Method Non-probability Sampling Sample Size DATA COLLECTION 144

9 Questionnaire Design Nominal Scales Ordinal Scales Interval Scales Ratio Scales Structured and Unstructured Responses Testing of the Questionnaire Response Rate Data Preparation Coding DATA ANALYSIS Characteristics of Good Measurement Validity Reliability Practicality Hypothesis Testing Descriptive Statistics Inferential Statistics Parametric Tests t-test One-way Analysis of Variance Nonparametric Tests Kruskal-Wallis One-way ANOVA Mann-Whitney U Test SUMMARY ANALYSIS AND INTERPRETATION OF RESULTS INTRODUCTION DEMOGRAPHIC PROFILE OF THE SAMPLE Age Profile of Respondents Gender Representation of Trailing Spouses Education Level of Respondents Nature of the Assignment Extent of Spouses Involvement in the Selection Process Accompanying Children Length of Time between Selection and Departure 170

10 Trailing Spouses Host Continent Trailing Spouses Employment Status Prior to the Assignment Trailing Spouses Employment Status while on Assignment Trailing Spouses Employment Status prior to the Assignment versus Status during the Assignment Spouses Previous International Experience Previous Expatriate Experiences Trailing Spouses Duration of Time Living in the Host Country Level of Adjustment in the Host Country Spouses Proficiency in the Host Language Prior to the Assignment Expatriate s Position within the Enterprise Head Office Location Size of the Multinational Enterprise Expatriates Industry of Employment DATA REDUCTION ANALYSIS Preparation Required by Trailing Spouses Prior to Departure Preparation Provided to Trailing Spouses Prior to Departure Training Required by Trailing Spouses Prior to the Assignment Training Provided to Trailing Spouses Prior to the Assignment Support Required by Trailing Spouses Support Provided to Trailing Spouses Summary of Data Reduction Analysis Results RELIABILITY Cronbach s Coefficient Alpha REQUIRED VERSUS PROVIDED Preparation Required versus Preparation Provided Individual t-test Results Paired t-test Results Training Required versus Training Provided Individual t-test Results Paired t-test Results Support Required versus Support Provided Individual t-test Results Paired t-test Results DESCRIPTIVE STATISTICS 208

11 Mean Scores for Preparation Required by Trailing Spouses Mean Scores for Training Required by Trailing Spouses Mean Scores for Vocational Support Required by Trailing Spouses Mean Scores for Social Support Required by Trailing Spouses INFERENTIAL STATISTICS Expatriate Trailing Spouses Requirements and Gender Expatriate Trailing Spouses Requirements and Level of Education Expatriate Trailing Spouses Requirements and Nature of the Assignment Expatriate Trailing Spouses Requirements and their Involvement in the Selection Process Expatriate Trailing Spouses Requirements and the Length of Time between Selection and Departure Expatriate Trailing Spouses Requirements and Host Continent Expatriate Trailing Spouses Requirements and Employment Status while on Assignment Expatriate Trailing Spouses Requirements and Previous International Experience Expatriate Trailing Spouses Requirements and Previous Accompanied Assignments Expatriate Trailing Spouses Requirements and Previous Personal Expatriate Experience Expatriate Trailing Spouses Requirements and Expatriates Management Level within the Enterprise Expatriate Trailing Spouses Requirements and the MNE s Head Office Location Expatriate Trailing Spouses Requirements and Size of the MNE OPEN-ENDED QUESTIONS SUMMARY CONCLUSION AND RECOMMENDATIONS INTRODUCTION LITERATURE REVIEW FINDINGS Demographic Profile Data Reduction Analysis Reliability 234

12 Preparation, Training and Support: Required versus Provided Descriptive Statistics Inferential Statistics Expatriate s Position within the MNE and the Preparation Requirements of Trailing Spouses RECOMMENDATIONS Preparation of Trailing Spouses Before the Assignment Training of Spouses Prior to the Assignment Support During the Assignment Expatriate Selection Processes LIMITATIONS CONTRIBUTIONS OF THE STUDY FUTURE RESEARCH 245 REFERENCES 247 APPENDIX A MEASURING INSTRUMENT 289

13 LIST OF FIGURES Figure 2.1 Figure 2.2 Figure 2.3 Figure 3.1 Figure 5.1 Figure 5.2 Figure 5.3 Figure 5.4 Figure 5.5 Figure 5.6 Figure 5.7 Figure 5.8 Figure 5.9 Figure 5.10 Figure 5.11 Figure 5.12 Figure 5.13 Figure 5.14 Figure 5.15 International Strategies Factors in Expatriate Selection The U-Curve of Cross-Cultural Adjustment Global Expatriation Mentoring Model Age Profile of Trailing Spouses Gender Representation of Trailing Spouses Self-initiated versus Enterprise-initiated Assignments Extent of Spouses Involvement in the Selection Process Children of School-going Age and Accompanying Status Duration of Time between Selection and Departure Graphical Illustration of the Dispersion of Trailing Spouses on Assignment across the Globe Employment Status of Expatriate Trailing Spouses Prior to the Assignment Spouses Years of Experience in the Industry Trailing Spouses Industry of Employment Prior to the Assignment Spouses Employment Status while on Assignment Employment Status Prior to the Assignment Compared with Employment Status in the Host Country Trailing Spouses Previous International Experience and its Assistance with Current Adjustment Trailing Spouses Previous Expatriate Experience Trailing Spouses Previous Expatriate Experience and its Assistance with Current Assignment Adjustment

14 Figure 5.16 Figure 5.17 Figure 5.18 Figure 5.19 Figure 5.20 Figure 5.21 Time Elapsed Since the Start of the Current Assignment Spouses Level of Adjustment in the Host Country Expatriates Position within the Enterprise Location of the Enterprises Head Office Size of the Multinational Enterprise in Employee Numbers Expatriates Industry of Employment

15 LIST OF TABLES Table 2.1 Table 2.2 Table 4.1 Table 5.1 Table 5.2 Table 5.3 Table 5.4 Table 5.5 Table 5.6 Table 5.7 Table 5.8 Table 5.9 Table 5.10 Table 5.11 Table 5.12 Table 5.13 Table 5.14 Table 5.15 Table 5.16 Table 5.17 Table 5.18 Typology of Expatriate Selection Systems Hardship Differential Pay Premiums for Selected Countries and Assignment Locations, December 2013 Types of Measurement Scales Age Profile of Trailing Spouses Education Level of Respondents Length of Time between Selection and Departure Trailing Spouses Host Continent Spouses Position in their Home-country Enterprise Time Elapsed Since the Start of the Current Assignment Length of Time to Feel Adjusted Proficiency in the Host Language Prior to the Assignment Expatriates Position within the Enterprise Location of the Enterprises Head Office Size of the Multinational Enterprise in Employee Numbers Eigenvalues and Variance Explained for Preparation Required Factor Matrix for Preparation Required by Trailing Spouses Eigenvalues and Variance Explained for Preparation Provided Factor Matrix for Preparation Provided to Trailing Spouses Eigenvalues and Variance Explained for Training Required Factor Matrix for Training Required by Trailing Spouses Eigenvalues and Variance Explained for Training Provided

16 Table 5.19 Table 5.20 Table 5.21 Table 5.22 Table 5.23 Table 5.24 Table 5.25 Table 5.26 Table 5.27 Table 5.28 Table 5.29 Table 5.30 Table 5.31 Table 5.32 Table 5.33 Table 5.34 Table 5.35 Table 5.36 Table 5.37 Table 5.38 Table 5.39 Table 5.40 Table 5.41 Factor Matrix for Training Provided to Trailing Spouses Eigenvalues and Variance Explained for Support Required Pattern Matrix for Support Required by Trailing Spouses Eigenvalues and Variance Explained for Support Provided Pattern Matrix for Support Provided to Trailing Spouses Combined Results of the Exploratory Factor Analysis Factor Reliability as Described by the Cronbach Alpha Values Individual t-test Results for Preparation Required versus Preparation Provided Paired t-test Results for Preparation Required versus Preparation Provided Individual t-test Results for Training Required versus Training Provided Paired t-test Results for Training Required versus Training Provided Individual t-test Results for Support Required versus Support Provided Mean Scores for Preparation Required Mean Scores for Training Required Mean Scores for Vocational Support Required Mean Scores for Social Support Required Mann-Whitney U Results for Gender Kruskal-Wallis Results for Level of Education t-test Results for Nature of the Assignment Kruskal-Wallis Results for Involvement in the Selection Process Kruskal-Wallis Results for Length of Time between Selection and Departure Kruskal-Wallis Results for Host Continent t-test Results for Employment Status while on Assignment

17 Table 5.42 Table 5.43 Table 5.44 Table 5.45 Table 5.46 Table 5.47 t-test Results for Previous International Experience One-Way ANOVA Results for Previous Accompanied Assignments Kruskal-Wallis Results for Previous Expatriate Assignments Kruskal-Wallis Results for Expatriates Management Level within the Enterprise Kruskal-Wallis Results for Enterprise s Head Office Location Kruskal-Wallis Results for Size of the Multinational Enterprise

18 CHAPTER 1 INTRODUCTION AND PROBLEM STATEMENT Emma-Louise Webber 1.1. INTRODUCTION AND PROBLEM STATEMENT The opportunities and challenges that arise as a result of globalisation have led to an increased need for multinational enterprises (MNEs) to establish foreign subsidiaries and to appoint managers in international locations (Haile, Jones & Emmanuel, 2007:100; Takeuchi, Wang & Marinova, 2005:925). Harzing (2004: ) and Schuler, Dowling and De Cieri (1993:430) claim that instead of employing locals, multinationals find it more advantageous to relocate their current managers to their foreign subsidiaries as they already possess the necessary experience, knowledge and expertise to successfully manage operations in a manner consistent with that of head office. These managers are referred to as expatriates. Carpenter, Bauer and Erdogan (2007:[5]) point out that MNEs also choose to appoint an expatriate, as opposed to recruiting a local employee, when enterprise-specific knowledge is important, confidentiality or speed is an issue, or when the corporate strategy is focused on global integration. According to Cascio and Aguinis (2011:397), an expatriate is any citizen of one country who is working outside his or her home country, with a planned return to that or a third country; or, as defined by Briscoe, Schuler and Claus (2009:165) and Haile et al. (2007:100), a citizen of one country who is assigned to another country to work in a foreign subsidiary. Briscoe et al. (2009:166) and Graf (2004:667) state that expatriates are used by multinationals to transfer technologies and enterprise culture in joint ventures or from headquarters to foreign subsidiaries, to enter new markets and to develop the employee s international skills. Ando, Rhee and Park (2007:115), as well as Bolino (2007:824) have identified three reasons for using expatriates, originally categorised by Edström and Galbraith (1977:253) as being: to fill positions; to develop managerial skills; and to develop the enterprise through control and coordination. According to Briscoe et al. (2009:165), Dowling and Welch (in Huynh, Johansson & Tran, 2007:5), and Reiche and Harzing (2009:5), expatriation can take three forms, namely those of parent-country nationals (PCNs), host-country nationals (HCNs) and third-country nationals (TCNs). 1

19 Parent-country nationals are employees in the parent enterprise that are transferred temporarily to a foreign subsidiary. Host-country nationals are employees sent from the host subsidiary to the parent country, while third-country nationals are those employees who are sent from one foreign subsidiary to another, both owned by the same enterprise (Briscoe et al., 2009:165; Cascio & Aguinis, 2011:397; Dowling & Welch in Huynh et al., 2007:5; Reiche & Harzing, 2009:5; Tung, 1982:59). Parent-country nationals have the greatest potential to influence a subsidiary s performance, owing to the strategic leadership positions they fill, and the role they play in transferring firm-specific knowledge and corporate culture to subsidiaries (Colakoglu & Caligiuri, 2008:1; Frändberg & Kjellman, 2005:1). Although the term expatriate means any employee who is working outside his or her home country (Reiche & Harzing, 2009:5), for the purposes of this study an expatriate will refer to a parent-country national, as this is the most common form used in multinational enterprises, and the reliance on PCN expatriates will continue to increase as foreign direct investment (FDI) grows (Briscoe et al., 2009:165; Huynh et al., 2007:6; Colakoglu & Caligiuri, 2008:1). In his seminal work, Perlmutter (1969:12) identified three staffing policies, namely ethnocentric, polycentric, and geocentric, while according to Reiche and Harzing (2009:4), a regiocentric approach was added in a later publication by Heenan and Perlmutter (1979). With an ethnocentric staffing policy, top positions in subsidiaries are filled by parent-country nationals, enabling the multinational to maintain control and coordination over subsidiaries, since PCNs better understand and internalise the common values and goals of the enterprise (Ando et al., 2007:115; Briscoe et al., 2009:165; Lam & Yeung, 2008:680; Perlmutter, 1969:12; Van Aswegen, 2008:42). In a polycentric staffing policy, host-country nationals are typically put in charge, allowing subsidiaries to act as distinct national entities with considerable decision-making authority (Briscoe et al., 2009:165; Perlmutter, 1969:13; Reiche & Harzing, 2009:3). This approach allows multinationals to effectively deal with language and cultural barriers that may arise when expatriates are used (Colakoglu, Tarique & Caligiuri, 2009:1293; Perlmutter, 1969:12). Colakoglu et al. (2009:1293) state that a geocentric staffing policy involves a diverse staffing composition in which parent-country, host-country, or third-country nationals can be found in key positions anywhere in a multinational s global operations. This approach seeks the best 2

20 people for key jobs regardless of their nationality (Briscoe et al., 2009:165; Perlmutter, 1969:13; Reiche & Harzing, 2009:4). In a regiocentric approach, multinationals divide operations into geographical areas, for example Europe, and employ, develop and transfer expatriates within these regions, enabling multinationals to respond effectively to local conditions (Briscoe et al., 2009:165; Reiche & Harzing, 2009:4; Van Aswegen, 2008:43). According to Frändberg and Kjellman (2005:2), Harvey and Moeller (2009:286), and Reiche and Harzing (2009:25), the expatriation process consists of four stages: 1. Selection The process of gathering information to choose appropriate candidates for overseas positions. 2. Training Involves preparing expatriates for their international assignments. 3. Arrival and Support Assistance is made available for expatriates during their initial adjustment period in the new country. 4. Repatriation The process of preparing expatriates and their families for their return to their home country. Briscoe et al. (2009:165) and Ntshona (2007:7) mention that the effective selection, training and management of international assignees has become the centre of attention in International Human Resource Management (IHRM) literature, and point out how necessary it is for enterprises to include expatriates in their IHRM strategies. One of the major issues facing IHRM is the failure of expatriates (Baruch & Altman, 2002:240; Handler, Lane & Maher, 1997:67; Hill, 2011:609; Shay & Tracey, 1997:30; Vögel & Van Vuuren, 2008:87). Expatriate failure can be seen as either underperformance by the expatriate during the international assignment, the premature return of the expatriate, or repatriate failure on returning to the home country (Briscoe et al., 2009:180; Harzing, 2004:274; Shen, 2005:657; Swarts & Du Plessis, 2007:48; Templer, 2010:1754). Okpara and Kabongo (2011:22) discuss numerous studies that estimate that roughly 20 to 40 percent of all expatriates sent on international assignments return to the home country prematurely. A study by Tung (1982:68) reports high failure rates in United States (US), West European, and Japanese multinationals. Seven percent of US multinationals indicated a 3

21 4 Emma-Louise Webber failure rate of 20 to 40 percent; 69 percent of the enterprises had a failure rate of 10 to 20 percent, while the remaining 24 percent had failure rates below 10 percent. The failure rates were lower in West European and Japanese multinationals (rarely exceeding 10 percent) which Briscoe et al. (2009:180) and Tung (1982:68) attribute to the fact that West European and Japanese expatriates by nature, selection, and training may be more adept at living and working in a foreign environment; or that European and Japanese MNEs may use different criteria when judging the ability of an individual to work effectively in the host country. However, according to Lund and Degen (2010:60), expatriate failure rates in China have been found to reach levels as high as 70 percent. Shay and Tracey (1997:31) mention that US expatriate failure rates (defined as the premature return of an expatriate) are estimated to be between 25 and 40 percent when the expatriate is assigned to a developed country, and 70 percent for a developing country. This is supported by Eastwood and Renard (2008:1) who mention a failure rate of 30 to 85 percent, and Briscoe et al. (2009:182), who mention that US failure rates range between 10 and 80 percent, with a common rate in the 30 to 40 percent range. Copeland and Griggs (in Shay & Tracey, 1997:31) estimate that 30 to 50 percent of expatriates who complete their assignments underperform. A survey by Van Heerden and Wentzel (in Van Aswegen, 2008:47) indicates a 9 percent failure rate for South African expatriates, while Hawley (in Swart & Du Plessis, 2007:48) states that between 25 and 40 percent of South African expatriates leave their international assignments early. Findings from Swart and Du Plessis (2007:62) indicate that the intention to quit a foreign assignment in Africa is 51 percent, while it is lower (36 percent) for expatriates stationed in developed countries (Europe or the US). Els (2007:66) found that 22 percent of South African expatriates failed their assignments, with failure defined as premature return, underperformance, or termination of the expatriate s contract. According to Van Aswegen (2008:47), South African failure rates are in line with international rates and, as many South African multinationals expand their operations into Africa, expatriate preparation and training processes need to be improved. According to Harzing (2004:274), Templer (2010:1754), and Tungli and Peiperl (2009:157), failure causes the expatriate to incur personal costs, including damage to the expatriate s career, self-esteem and relationships, and stress or health problems, as well as family conflict. Haile et al. (2007:101), Shen (2005:657), and Templer (2010:1754) point out that direct costs for the enterprise include the expatriate s salary, training, travel and relocation expenses. Indirect costs arise if the relationship with the host country is damaged, if the expatriate

22 underperforms, if there are damages to the enterprise s reputation and image, or if market share or business opportunities are lost (Graf & Harland, 2005:46; Haile et al., 2007:101; Harzing, 2004:274; Shen, 2005:657; Templer, 2010:1754). The average cost per failure to the enterprise can be as high as two and a half times the expatriate s annual domestic salary plus the cost of relocation (Anderson, 2005:572). Briscoe et al. (2009:182), Carpenter et al. (2007:[5]), and Graf and Harland (2005:46) estimate the value of these failures to generally range between US$ and US$1.2 million. In South Africa, Van Aswegen (2008:45) states that expatriates in executive positions can cost an enterprise an estimated R1 million per year. According to Anderson (2005:568), Briscoe et al. (2009:165), Haile et al. (2007:101) and Tung (1982:76), the inability of the manager or the manager s spouse to adapt to the new environment or other family-related issues have been identified as common causes of failure among US expatriate managers. Hawley (in Van Aswegen, 2008:54) identified the following as common reasons for failure among South African expatriates: A poor understanding of the foreign culture and language An unwillingness to train the host nationals Insufficient preparation of the expatriate and their family An ethnocentric attitude (a perception that one s culture is superior to another) Hill (2011:611), Mohr and Klein (2004:1190), and Rosenbusch and Cseh (2012:61) state that expatriates rarely fail due to technical incompetence, but rather because of family and personal issues, concerns regarding the spouse s career, or a lack of intercultural skills that were not addressed during the selection process. Van Heerden and Wentzel (in Van Aswegen, 2008:54) indicate that 62 percent of failed assignments are due to personal reasons (spouse, family and adjustment), 10 percent are due to health-related reasons and 28 percent to performance issues. This coincides with the causes of failure among US expatriates and emphasises the role of family in the adjustment process. Andreason (2008:386), Briscoe et al. (2009:185), and Mendenhall, Dunbar and Oddou (1987:331) discuss the numerous obstacles that expatriates and their spouses confront in the foreign societies to which they are assigned. These may include culture shock, isolation, 5

23 homesickness and differences in work-related norms, healthcare systems, housing, schooling, cuisine, language and gender roles, as well as the cost of living. Deen (2011:10), Harvey and Moeller (2009:280), and Haslberger and Brewster (2008:326) acknowledge that these obstacles tend to create high levels of stress and tension for those spouses who accompany their partners on assignment, which may lead to conflict within the family, affecting the expatriate s morale and ability to perform their job effectively. Many enterprises fail to recognise the relationship between an expatriate s and their trailing spouse s adjustment while overseas, and as a result they neglect to include the family in the expatriation process. According to Andreason (2008:387), Caligiuri et al. (2009:257), Gupta, Banerjee and Gaur (2012a:3560), and Van Erp, Giebels, Van der Zee, and Van Duijn (2011a:75), many studies have proved that trailing spouses deal with greater stress and adjustment difficulties than does the expatriate in the host environment. The spouses tend to be less sheltered from the foreign environment and more exposed to the culture than the expatriates, yet they tend to be excluded from selection and training processes and receive less in-country support, making it harder for them to adjust (Andreason, 2008: ; Tung, 1982:65; Wilson, 2011:9). The spouse often struggles overseas; while the expatriate has a sense of belonging at the office, the spouse is left feeling alienated without the social support network that was present in their home country. Cross-cultural adjustment of the spouse and family can have a positive or negative effect on the expatriate s adjustment, a situation referred to as crossover. Crossover is defined as a situation where the stress and strain experienced by the spouse at home leads to stress and strain experienced by the expatriate in the workplace, and vice versa. The spouse s overseas experience affects the expatriate s adjustment and performance at work, and spouses (especially wives) have considerable influence over their partner s decisions and behaviour. An unhappy spouse is therefore the most frequent cause of expatriate failure. This crossover effect makes it important to include the spouse during preparation, training and support processes in order to reduce the possibility of expatriate failure (Andreason, 2008:390; Gupta et al., 2012a:3560; Lazarova, Westman & Shaffer, 2010:93; McNulty, 2012: ; Rosenbusch, 2010:116; Tung, 1982:67; Westman, 2001:718). Ntshona (2007:68) found that 83 percent of South African expatriate managers have a spouse or partner that would either be left behind or would accompany the manager on assignment. Ali, Van der Zee and Sanders (2003:564) as well as Wu and Ang (2011:2690) state that 6

24 approximately 80 percent of expatriates take their spouses with them on assignment, while Van Erp et al. (2011a:58) found that 90 percent of all expatriates are accompanied by their partners. Haslberger and Brewster (2008: ) discuss a study that reported that roughly 60 percent of expatriates are accompanied by their spouse on the assignment; 60 percent of these trailing spouses were employed before, only 21 percent were employed during the assignment. A study by McNulty (2012:428) found that only 36 percent of trailing spouses were able to continue with their careers in the host country due to visa or work permit restrictions. Spouses who give up their jobs ultimately experience boredom, underload, and a loss of professional status, which negatively affects the expatriate s adjustment, leading to failure. A survey in 2005 by General Motors Acceptance Corporation (GMAC) and the National Foreign Trade Council (NFTC) (quoted by Brown, 2008:1019) showed that 47 percent of candidates withdraw themselves from consideration during a multinational s selection process due to family concerns, while a study by PricewaterhouseCoopers (PWC) (quoted by Brown, 2008:1019) found that 59 percent of candidates refused an international assignment due to dual-career issues. This is supported by Shell and Solomon (in Els, 2007:23) who indicate that 48 percent of reasons for turning down an international assignment are spouse related, 27 percent are related to the manager s children, and 29 percent are related to both the spouse and children. Mäkelä, Känsälä and Suutari (2011:185) and McNulty (2012:418) mention that family and personal circumstances as well as partner s career are the most common reasons for expatriates refusing overseas assignments. Briscoe et al. (2009:183) discuss the results of a survey by Runzheimer International and ORC International. They state that almost 50 percent of enterprises offer some form of support for the expatriate s spouse: 87 percent of these provide assistance only when necessary, and only 13 percent have formal policies regarding trailing spouses. A study by Shay and Tracey (1997:33) found that only 12.5 percent of spouses were included in training programmes designed to aid in overseas adjustment, while McNulty (2012:421) found that only 13 percent of enterprises are interested in improving their expatriates spouse and family assistance programmes. International assignments play a strategic role in the success of any business venture and have become an integral part of multinationals business strategies (Riusala & Suutari, 2004:745; 7

25 Van Aswegen, 2008:2). The inability or unwillingness of the spouse to adjust to the host environment is the primary cause of expatriate failure (and the only consistent reason among European expatriates), as it significantly affects the expatriate s work performance (Andreason, 2008:382; Brown, 2008:1019; Deen, 2011:11; Shen, 2005:658; Swarts & Du Plessis, 2007:47; Tung, 1981:76). According to Mäkelä, Känsälä and Suutari (2011:186), Miser (2010:1), and Van Erp, Giebels, Van der Zee, and Van Duijn (2011b:539), the successful adjustment of an expatriate s spouse is significantly related to the success of an international assignment. The spouse should therefore be included in multinationals preparation, training and support initiatives, in order to reduce the possibility of expatriate failure. As a result, this study focused on the following research question: What are the preparation, training and support requirements of trailing spouses prior to, and during an international assignment? 1.2. RESEARCH OBJECTIVES In order to answer the research question stated above, the following research objectives were set for this study: To determine whether or not there is a difference between the preparation required by trailing spouses and the preparation received from the enterprise prior to the assignment. To determine whether or not there is a difference between the training required by trailing spouses and the training received from the enterprise prior to the assignment. To determine whether or not there is a difference between the support required by trailing spouses and the support received from the enterprise during the assignment LITERATURE REVIEW AND HYPOTHESES Despite the fact that the inability of the expatriate s spouse to adjust has been found to cause premature return from an assignment, very few studies have focused on the spouses adjustment process and point of view (Andreason, 2008:386; Konopaske, Robie & Ivancevich, 2005:406; Takeuchi, 2010:1047, Wilson, 2011:9). In a study by Handler et al. (1997:73), 97.3 percent of respondents agreed that expatriate success or failure is directly 8

26 9 Emma-Louise Webber related to the happiness of the spouse. The spouses support of the expatriate and the assignment, and their adjustment and satisfaction during an international assignment is crucial for its success (Cole, 2012:309; Konopaske et al., 2005:407; Long, 2010:75; Wang, Bullock & Oswald, 2011:74). According to Gupta, Banerjee and Gaur (2012b:26) and Vögel et al. (2008:38), expatriates who are accompanied by their spouses and families require special support and training from their enterprise. Studies by Gupta et al. (2012b:26) and Vogel and Van Vuuren (2008:80) therefore emphasise the importance of spousal preparation, training and support before and during an international assignment, to aid them in overcoming the various issues they are likely to face in the unfamiliar host environment Preparation Requirements A lack of preparation and relocation assistance has proved to be a primary source of stress for trailing spouses (Brown, 2008:1022; Forster, 1997:427). A survey by CIGNA International (quoted in Brown, 2008:1030) found that 53 percent of enterprises felt they provided sufficient preparation for expatriate families, while only 32 percent of expatriates felt that their families received adequate preparation and support prior to, and during the international assignment. Numerous studies (Bikos, Çiftçi, Güneri, Demir, Sümer, Danielson, DeVries & Bilgen, 2007:36; Cherry, 2010:133; Dewald & Self, 2008:357; Forster, 1997:423) emphasise the need for better pre-departure spousal preparation programmes by the MNE, including information and training regarding the country, its language, culture and living standards. Cherry (2010:133) and Dewald and Self (2008:357) state that an enterprise s involvement of the spouse in pre-departure preparation regarding the assignment, including supplying information on the foreign country s culture and living standards, aids in their general adjustment. According to Cherry (2010:139), Kim and Tung (2013:1045), Purgal-Popiela (2011:39), and Vogel and Van Vuuren (2008:85), enterprises should provide families with a realistic preview of everyday life in the host country, as well as accurate and up-to-date information about the country, its people and culture. This can be achieved through the arrangement of orientation visits to the foreign country. Ashamalla (1998:58), Cascio (2006:645), and Sharma (2012:15) recommend that enterprises organise orientation visits to the host country for potential expatriates and their spouses before their final departure, as the cost of such visits is insignificant when compared to the costs associated with expatriate failure. In a study by Vögel and Van Vuuren (2008:85), 98 percent of expatriates on assignment for a period under four years, and 80 percent of those on

27 assignment for more than four years, agreed that enterprises should organise a pre-departure orientation visit to the host country for expatriates and their spouses. These pre-assignment visits will allow the couple to familiarise themselves with the local culture and customs, learn appropriate behaviours, and set realistic expectations about the assignment and foreign environment. Orientation visits provide expatriates and their spouses with invaluable firsthand information regarding the host country and culture, which may reduce spousal uncertainty and aid in spouses adjustment during the assignment (Ashamalla, 1998:58; Black & Gregersen, 1991a:464; Ghafoor, Khan, Idrees, Javed & Ahmed, 2011:338; Rosenbusch & Cseh, 2012:63; Sharma, 2012:15; Sims & Schraeder, 2004:76). On the other hand, Harvey and Wiese (1998a:368) and Sims and Schraeder (2004:76) are of the opinion that pre-departure orientation visits often become tourist visits or holidays, and the expatriate couple return to their home country with an unrealistic perception of the host country s culture and customs. As a result of these misperceptions, the couple experience severe culture shock on their arrival in the host country, as they realise that the culture and lifestyle they experienced in their orientation visit differs significantly from reality. A study by Kim and Tung (2013:1042) found that spouses who arrived in the host country with unrealistic expectations soon became dissatisfied with the country, culture and living conditions, which inhibited their cross-cultural adjustment and often resulted in the family s premature return. Enterprises should offer relocation, housing, and placement assistance, and provide expatriates and their spouses with lists of property agents, appropriate schools, shopping centres and medical clinics prior to the assignment (Cherry, 2010:139; Kim & Tung, 2013:1045; Purgal-Popiela, 2011:39). Forster (1997:423) found that 70 percent of trailing spouses received some form of briefing prior to their departure, while only 50 percent of these spouses rated the preparation as helpful. Spouses often struggle to adjust and consistently assign low ratings to MNE predeparture preparation programmes. As a result, the following hypotheses were developed and tested: H1O: There is no difference between the preparation required by trailing spouses and the preparation provided to them by the multinational enterprise prior to the assignment. 10

28 H1A: There is a difference between the preparation required by trailing spouses and the preparation provided to them by the multinational enterprise prior to the assignment Training Requirements As previously stated, an expatriate or spouse s inability to adapt to the host country s culture has been found to be the primary cause of expatriate failure. In situations where the spouse is unable to adjust in the local environment, the expatriate also tends to struggle with adjusting (Fischlmayr & Kollinger, 2010:455; Harvey, 1995:226; Jenkins & Mockaitis, 2010:2694; Konopaske et al., 2005:405; Lund & Degen, 2010:68; Malek & Budhwar, 2013:222; Peltokorpi & Froese, 2012:739). Brown (2008:1022), Cherry (2010:133), Kim and Tung (2013:1035), Purgal-Popiela (2011:39), and Wilson (2011:72-73) explain that trailing spouses are faced with various uncertainties that stem from existing language barriers and cultural differences in daily activities, as well as other various challenges that arise from their interaction with host nationals. Dewald and Self (2008:356), Lund and Degen (2010:70) and Kim and Tung (2013:1034) suggest providing pre-departure training to expatriates and their families to familiarise them with host-country practices and to avoid their developing unrealistic expectations regarding the host country. Shaffer and Harrison (2001:243) define cultural novelty as commonplace features or everyday customs of a country s culture. Differences in the host country s language and cultural novelty will have a greater impact on the accompanying spouse than on the expatriate. Spouses often struggle to adjust as they become confused, stressed, and overwhelmed by their lack of knowledge and understanding of the new, foreign culture and its customs. (Andreason, 2008:387; Caligiuri et al., 2009:257; Ghafoor et al., 2011:337; Gupta et al., 2012a:3560; Shaffer & Harrison, 2001:238; Sims & Schraeder, 2004:74; Takeuchi et al., 2007:932; Van Erp et al., 2011a:75). While expatriates have the stability of a familiar work environment, the spouse tends to be more immersed in the local culture on a daily basis, interacting with locals who may not speak English and who are not accustomed to dealing with foreigners (Andreason, 2008:386; Ashamalla, 1998:59; Cole, 2012:313; Harvey & Wiese, 1998a: ; Purgal-Popiela, 2011:33; Shaffer & Harrison, 2001:238; Tung, 1982:65; Wilson, 2011:9). 11

29 Trailing spouses need for training prior to their departure is emphasised throughout expatriate literature (Fischlmayr & Kollinger, 2010:471; Mohr & Klein, 2004:1197; Smart, 2011:64; Vögel & Van Vuuren, 2008:85). Expatriates and spouses who are prepared for and aware of the host country s religious, cultural, language, and lifestyle differences, will have a mental idea of potential situations that may arise during the assignment. This mindset of being prepared should increase their confidence in the assignment, eliminate uncertainty, and ease their adjustment in the local environment, reducing the chance of premature return (Cho, Hutchings & Marchant, 2013:1053; Gupta et al., 2012b:18; Jenkins & Mockaitis, 2010:2696; Konopaske & Werner, 2005:1161; Mohr & Klein, 2004:1197; Shaffer & Harrison, 2001:244; Sims & Schraeder, 2004:76; Smart, 2011:90). Kupka, Everett and Cathro (2008:1783), Mohr and Klein (2004:1194), and Shaffer and Harrison (2001:241) found that spouses who acquired a basic repertoire in the foreign language had a more positive overseas experience, and adjusted more easily than those who made no attempt to learn the language. Language and communication problems create social barriers, making it difficult to cope with everyday tasks, form friendships, find employment, adjust, and integrate with the locals (Ashamalla, 1998:59; Bikos et al., 2007:52; Cherry, 2010:137; Kim & Tung, 2013:1033; Mohr & Klein, 2004:1194; Purgal-Popiela, 2011:38; Rosenbusch & Cseh, 2012:73; Sharma, 2012:16). Enterprises should therefore provide relevant pre-departure and post-arrival training, to assist spouses with adjusting to the host culture and language, and with developing social competences and networking skills (Cherry, 2010:140; Lund & Degen, 2010:70; Okpara & Kabongo, 2011:29). Gupta et al. (2012b:17-21), Lund and Degen (2010:70), Mansour and Wood (2010:387), and Rosenbusch and Cseh (2012:63) found that spouses in general did not receive relevant predeparture training from the expatriate s enterprise, and were sent to the host country unprepared, without any briefing about the new culture they would experience. Sims and Schraeder (2004:76) state that many managers believe that pre-departure training for expatriates and their spouses is expensive, time consuming, and often ineffective in reducing culture shock. Multinationals are unwilling to invest in training programmes due to previously high expatriate failure rates. Programmes that exist then tend to be ineffective and run by unqualified individuals (Lund & Degen, 2010:70). Mansour and Wood (2010:388), Mohr and Klein (2004:1195), Rosenbusch and Cseh (2012:63), and Takeuchi, Yun and Tesluk (2002:29) state that a spouse s inability to adjust 12

30 has a negative effect on an expatriate s intention to stay in the host country and complete the assignment; however, spouses in general do not receive training from the MNE. Enterprises should provide pre-departure and in-country cross-cultural and basic language training to spouses, as the greater the cultural differences between the home and host countries, the more difficult it will be for accompanying spouses to adjust (Andreason, 2008:388; Mäkelä, Känsälä and Suutari, 2011:190; Mohr & Klein, 2004:1195; Rosenbusch & Cseh, 2012:73). As a result, the following hypotheses were developed and tested: H2O: H2A: There is no difference between the training required by trailing spouses and the training provided to them by the multinational enterprise prior to the assignment. There is a difference between the training required by trailing spouses and the training provided to them by the multinational enterprise prior to the assignment Support Requirements According to Cherry (2010:133), Cho et al. (2013:1052), Handler et al. (1997:69), Konopaske et al. (2005:412), and Wilson (2011:38), overseas assignments usually require trailing spouses to give up the current and familiar structure and stability in their lives, increasing their uncertainty and stress levels and inhibiting their ability to adjust. Unlike the expatriate, the spouse does not always receive support from the MNE, either before or during the assignment, and MNEs often fail to establish support policies and programmes regarding trailing spouses (Cherry, 2010:133; Cole, 2012:313; Fish, 2005:226; Purgal-Popiela, 2011:38). Cherry (2010:140) states that enterprises should be supportive of trailing spouses, as they deal with the challenges that arise as a result of leaving behind their career, home, family and friends. One of the primary stressors for trailing spouses is the anticipated loss of social support provided by family and friends in the home country. This lack of support increases the spouse s feelings of isolation, which has been known to cause conflict within the family, resulting in decreased spousal adjustment and expatriate productivity (Andreason, 2008:389; Cherry, 2010:133; Crowne & Goeke, 2012:10; Harvey, 1997a:630; Mäkelä, Känsälä and Suutari, 2011:190; Mohr & Klein, 2004:1193; Smart, 2011:31; Wilson, 2011:38). Trailing spouses therefore require strong social support from host nationals as well as the enterprise, in order to successfully adjust in the host country and to reduce failure that often occurs within the first year of an assignment. According to Cole (2012:313), Fischlmayr and 13

31 Kollinger (2010:472), Long (2010:178), Wilkinson and Singh (2010:178), and Wilson (2011:17-18), social support has a significant effect on psychological well-being and personal growth, reducing uncertainty and allowing spouses to get advice from host nationals, form friendships, and share experiences with like-minded people. Harvey and Buckley (1998:99), Konopaske et al. (2005:408) and Mäkelä, Känsälä and Suutari (2011:186) define a dual-career family as a couple where both the husband and wife are employed, psychologically committed to their work, and earning an income for the family. Recent trends indicate that the number of dual-career couples sent on international assignments is growing significantly. Enterprise support for these families before, during, and after an assignment is necessary to help minimise their uncertainty and stress (Harvey, 1995:224; Konopaske et al., 2005:408, Mäkelä, Känsälä and Suutari, 2011:188; Wilson, 2011:76). Dual-career couples are often faced with many issues and problems when an expatriate manager accepts an international assignment. These problems often arise when trailing spouses seek employment in the host country, as spouses are often unable to find suitable or satisfying work, or are ineligible to work in host countries with conservative cultures. When giving up their careers, trailing spouses experience role changes and feel a loss of identity and self-esteem. The anticipated loss of additional income and career development may also reduce the expatriate family s living standards, and lead to disagreements within the family (Cho et al., 2013:1053; Harvey, 1995:226; Konopaske et al., 2005:407; Lauring & Selmer, 2010:61; Shaffer, Kraimer, Chen & Bolino, 2012:1295). The resultant stress experienced by spouses in this situation often has a crossover effect on the expatriate s work performance and adjustment, increasing the likelihood of failure (Andreason, 2008:390; Gupta et al., 2012a:3560; Harvey, 1997a:630; Lazarova et al., 2010:93; McNulty, 2012: ; Rosenbusch, 2010:116; Rosenbusch & Cseh, 2012:63). Andreason (2008:388) and Rosenbusch and Cseh (2012:63) mention that spouses who do not experience a change in their employment status adjust more easily on an international assignment than those who give up, or put their careers on hold. According to Cole (2012:313), Mäkelä, Känsälä and Suutari (2011:188), Vögel and Van Vuuren, (2008:85), and Wilson (2011:67), enterprises should provide trailing spouses with employment assistance, as spouses who are employed in the host country receive social support, and learn culturespecific behaviours from their host-national colleagues in the workplace. Enterprise 14

32 15 Emma-Louise Webber assistance may include the creation of a position within the foreign subsidiary, assistance with obtaining the necessary work permits, recommending the spouse to other enterprises operating in the host country, or the payment of a spouse s further education expenses. McNulty (2012:428) found that only 36 percent of trailing spouses were able to continue with their careers in the host country, due to visa or work permit restrictions. Harvey (1995:234) states that only 8 percent of enterprises provide trailing spouses with employment opportunities within the enterprise, 35 percent assist the trailing spouse with finding other employment, and 29 percent assist with obtaining the necessary work permits. Kupka and Cathro (2007:960) found that only 10 percent of trailing spouses who were employed in the host country were assisted by the enterprise in their job search, while 85.7 percent of spouses struggled to obtain work by themselves. Expatriates often refuse an international assignment due to the negative impact the assignment may have on their spouse s career, or their spouse may refuse to accompany them as they are committed to their own careers (Brown, 2008:1019; Cho et al., 2013:1053; Els, 2007:23; Fischlmayr & Kollinger, 2010:458; Mäkelä, Känsälä and Suutari, 2011:188). Job and career issues and the absence of enterprise support create unwanted pressure and stress for trailing spouses (Konopaske et al., 2005:407). Wilkinson and Singh (2010:170) are of the opinion that the negative effects of stress experienced by trailing spouses can be controlled through the provision of enterprise support. Without the necessary support, trailing spouses take longer to adjust in the foreign environment, which increases their and the expatriate s stress, as well as the likelihood of expatriate failure (Andreason, 2008:299; Cole, 2012:313; Gupta et al., 2012b:6; Harvey & Wiese, 1998a:365). Wilson (2011:77) emphasises the importance of enterprise support for expatriate trailing spouses, and states that the costs associated with expatriate failure far outweigh those of providing spouses with support assistance. Nevertheless, a survey by Cartus (in Wilson, 2011:22) reported a 6 percent decrease in enterprises spouse support programmes between 2007 and 2010, which was accompanied by a 15 percent decrease in the number of trailing spouses who accompanied expatriates on international assignments. Forster (1997:427) discusses the fact that MNEs fail to provide adequate support for expatriates and their spouses while on assignment, which reduces the probability of such families accepting international assignments in the future. Enterprises should therefore provide support for the spouse during the assignment, in the form of employment assistance,

33 mentoring programmes, expatriate communities, enterprise social gatherings, health clubs, or regular visits back home, to reduce stress associated with adjusting to an unfamiliar environment. Enterprise assistance may also include housing, shopping, schooling advice, counselling, stress monitoring, and supporting work-life balance by introducing the family to leisure, social, and cultural activities (Cole, 2012:313; Crowne & Goeke, 2012:10; Gupta et al., 2012b:1; Harvey, 1997a:649; Lauring & Selmer, 2010:61; Rosenbusch & Cseh, 2012:63; Wilkinson & Singh, 2010: ). As a result, the following hypotheses were developed and tested: H3O: H3A: There is no difference between the support required by trailing spouses and the support provided to them by the multinational enterprise during the assignment. There is a difference between the support required by trailing spouses and the support provided to them by the multinational enterprise during the assignment RESEARCH DESIGN A research design is the blueprint for collecting, measuring and analysing a set of data in order to answer a research question. The plan contains clear objectives or directions, indicates how sources of data will be selected, and outlines any constraints that may arise (Blumberg, Cooper & Schindler, 2008:69; Bryman & Bell, 2007:40; Cooper & Schindler, 2011:139; Lee & Lings, 2008:182; Saunders, Lewis & Thornhill, 2009:137). The following research design was used to determine the requirements of current trailing spouses, and to compare their requirements with those which their respective multinational provided, in terms of preparation, training and support Degree of Research Question Crystallisation According to Blumberg et al. (2008:196), Cooper and Schindler (2011:140), Hair, Money, Samouel and Page (2007:153), and Saunders et al. (2009:139), a research design may be viewed as exploratory, formal (otherwise referred to as descriptive), or causal. An exploratory study tends towards loose structures and aims to improve one s understanding of a problem or opportunity, enabling the researcher to discover issues for future research. A formal study begins where an exploratory study leaves off, with a clear research question that will later be answered, or hypotheses that will be tested. This type of study uses precise procedures and data source specifications to obtain data to describe the characteristics of the 16

34 17 Emma-Louise Webber research, or to discover associations among variables. Causal research tests whether or not one event causes or forces another to occur, or if a change in one event brings about a corresponding change in another. This study was preceded by a comprehensive literature study, from which the hypotheses were formulated. Although an element of exploration was required for this literature study, a formal study was conducted to determine the preparation, training and support requirements of expatriate trailing spouses, before and during an international assignment. In order to develop a questionnaire, a further literature study was then conducted Method of Data Collection According to Cooper and Schindler (2011:141), this classification distinguishes between monitoring and communication processes. Monitoring involves inspecting the activities of a subject or the nature of some material without attempting to obtain a response, as opposed to a communication study, in which subjects are questioned through interviews or telephone conversations, through experiments, or through self-administered or self-reported instruments sent electronically, by mail, or left in easily accessible locations. The subjects responses are then recorded for analysis (Blumberg et al., 2008:197; Cooper & Schindler, 2011:141). According to Bryman and Bell (2007:304), Hair et al. (2007:195), and Lee and Lings (2008:255), content analysis involves obtaining data by monitoring and examining the content or message of written text. Primary data was collected for this study through a communication study in the form of a self-administered instrument. Electronic questionnaires were sent to expatriate spouses currently on international assignment. Demographic questions were included, as well as criteria adapted from the literature regarding preparation, training and support that spouses required, or received from the enterprise before and/or during the assignment. The questions were set out in such a way that they allowed spouses to indicate, according to a 5-point Likert scale, whether or not they felt a specific criterion was required to aid in their adjustment, as well as whether or not the expatriate s enterprise provided that particular criterion Type of Data Data collected during the research process may be qualitative or quantitative. Qualitative research is based on researcher immersion in the phenomenon to be studied, gathering data which provide a detailed description of events, situations, and interactions between people

35 and things, providing depth and detail (Cooper & Schindler, 2011:140). Quantitative research attempts to attain a precise measurement of something such as consumer knowledge, opinions, or attitudes. Quantitative research aims to test theory using statistical analysis, whereas qualitative research builds theory and rarely tests it. With quantitative research, data numbers are used to represent the characteristics of something, while qualitative data is represented in a textual form (Blumberg et al., 2008:192; Bryman & Bell, 2007:402; Hair et al., 2007:151; Lee & Lings, 2008:233; Saunders et al., 2009:151). This study made use of quantitative data in the form of trailing spouses opinions, to test the above-mentioned hypotheses and to form recommendations regarding their preparation, training and support requirements Researcher s Control of Variables Researchers have the ability to manipulate variables during the research process. The extent to which they are able to do this depends on whether an experiment or an ex-post facto design is being used. In an experiment, researchers may control and/or manipulate the variables in the study if they wish to ascertain whether or not specific variables can affect others. On the other hand, with an ex-post facto design, researchers cannot manipulate or control variables and can only report what has occurred or is occurring (Blumberg et al., 2008:197; Bryman & Bell, 2007:44; Cooper & Schindler, 2011:141; Saunders et al., 2009:142). An ex-post facto design was used for this study, since the research process was an after-thefact event; the researcher had no control over the variables, and was unable to manipulate them during their answering of the questionnaire Purpose of the Study According to Blumberg et al. (2008:10-11) and Cooper and Schindler (2011:141), depending on its purpose, a research study may be either reporting, descriptive, causal-explanatory, or causal-predictive. Reporting studies summarise data to attain a deeper understanding of something, or for example produce statistics to compare objects. A descriptive study aims to establish who, what, where, when or how much, while a causal-explanatory study is concerned about learning why, or aims to determine how variables affect one another (the relationship between them). A causal-predictive study attempts to predict the effect a variable can have on another if it is manipulated, while all other variables remain constant. 18

36 A descriptive study was used to determine trailing spouses requirements in terms of preparation, training and support during and prior to an international assignment Time Dimension In terms of the time dimension of the research, studies can be classified as either crosssectional or longitudinal. A cross-sectional study is a once-off study which collects data on all the variables present at a specific point in time to note similarities or differences, while longitudinal studies are repeated over an extended period, to identify trends or seasonal patterns in the same sample. Longitudinal studies may be in the form of a panel where the same people are studied over a period of time, or a cohort group where different people who share a specific characteristic are used for each measurement. The use of longitudinal studies is limited, as they are expensive and time consuming. (Blumberg et al., 2008:199; Bryman & Bell, 2007:55; Bryman & Bell, 2011:53-57; Cooper & Schindler, 2011:142; Hair et al., 2007:129; Lee & Lings, 2008: ; Saunders et al., 2009:155). This research required a cross-sectional study to determine preparation, training and support requirements identified by spouses as necessary for adjustment. Similarities and differences between trailing spouses opinions on their requirements were noted at one point in time Topical Scope A research report may be classified as a statistical study or a case study. According to Blumberg et al. (2008: ) and Cooper and Schindler (2011:141), statistical studies focus on the breadth of information rather than the detail, and attempt to capture a population s characteristics by making deductions from the sample s characteristics determined through the study. In a statistical study, hypotheses are tested quantitatively, and generalisations are presented based on the representativeness of the sample and the validity of the design. Case studies, on the other hand, focus on the depth of information, and attempt to gain a full contextual analysis of fewer events or conditions by relying on qualitative data, which often complicates the researcher s ability to support or reject a proposition. A statistical study was used to determine the preparation, training and support requirements of trailing spouses included in the study. The hypotheses were tested quantitatively and the results from the sample were then used to make assumptions regarding the population of current expatriate trailing spouses, and their requirements before and during an assignment. 19

37 Research Environment Research may take place under actual environmental conditions, otherwise known as field conditions, or the environment may be manipulated under laboratory conditions (Blumberg et al., 2008:200; Bryman & Bell, 2007:44; Cooper & Schindler, 2011:142). Owing to the fact that conditions could not be staged or manipulated as expatriate trailing spouses completed the online questionnaire while on an international assignment, the research for this study was conducted under field conditions CHAPTER OUTLINE This study consists of six chapters, as outlined below: Chapter 1: Introduction and Problem Statement Chapter one covers the introduction and background to the study, the literature review and resultant hypotheses, as well as a brief explanation of the methodology to be used throughout the study. Chapter 2: International Human Resource Management Chapter two consists of two main themes, namely International Human Resource Management (IHRM) and Expatriates. The IHRM section discusses the strategic role of IHRM and leads into the expatriate section, which consists of a comprehensive study of expatriate literature, with the main focus being on expatriate failure. Other topics covered include the different staffing policies, forms of expatriates, and their strategic role in multinational enterprises. Chapter 3: Expatriate Trailing Spouses Chapter three focuses on expatriate trailing spouses, as their inability to adjust has been found to be the primary cause of expatriate failure. The reasons behind this as well as their preparation, training and support requirements as discussed in the literature are explored in this chapter. 20

38 Chapter 4: Research Methodology A detailed description of the methodology to be followed throughout the study is given in Chapter four. The chapter includes details regarding the sample, how the questionnaire was developed, and how primary data was captured and processed. Chapter 5: Analysis and Interpretation of Results Chapter five records and analyses the results of the empirical research findings regarding the preparation, training and support requirements of expatriate trailing spouses. Chapter 6: Conclusion and Recommendations The last chapter provides a discussion of the research findings and states conclusions that can be drawn from the study s findings. These conclusions lead to the development of recommendations for MNEs when preparing and training expatriate spouses for overseas assignments, as well as the development of potential support mechanisms that may improve the spouses experiences during overseas assignments ABBREVIATIONS The following abbreviations were used in the text: Comma-delimited Format CSV Confirmatory Factor Analysis CFA Cultural Intelligence CQ Exploratory Factor Analysis EFA Foreign Direct Investment FDI General Motors Acceptance Corporation GMAC Host-Country National HCN Human Resources HR Human Resource Management HRM International Human Resource Management IHRM 21

39 Multinational Enterprise MNE Emma-Louise Webber National Foreign Trade Council NFTC Parent-Country National PCN PricewaterhouseCoopers PWC Self-initiated Expatriate SIE Social Learning Theory SLT Strategic Human Resource Management SHRM Third-Country National TCN U-Curve Theory UCT United Arab Emirates UAE United Kingdom UK United States of America US Work-Family Conflict WFC Work-Life Balance WLB 1.7. REFERENCING TECHNIQUE The Harvard referencing technique was used for all references used throughout this study. 22

40 CHAPTER 2 INTERNATIONAL HUMAN RESOURCE MANAGEMENT Emma-Louise Webber 2.1. INTRODUCTION An enterprise s success is determined by its ability to acquire and build an effective workforce with unique capabilities that allow the enterprise to meet strategic objectives, and gain a competitive advantage over its rivals. An enterprise s human resources therefore consist of its highly capable, motivated and adaptive workforce, while human capital describes the economic value of its employees knowledge, skills and capabilities (Cascio, 2006:6; Grobler, Wärnich, Carrell, Elbert & Hatfield, 2011:3; Kozlowski, 2011:271; Snell & Bohlander, 2010:13; Wright, McMahan & McWilliams, 1993:6). According to Hitt, Bierman, Shimizu and Kochhar (2001:13) and Snell and Bohlander (2010:14), human capital is intangible and cannot be managed in the same manner as products or technologies. Employees own their own human capital, enabling them to take it with them if they leave an enterprise. Enterprises should therefore institute staffing and development policies to recruit and train the best and brightest talent available, in order to enhance the enterprise s competitive advantage. Human Resource Management (HRM) crosses all the functional areas of an enterprise and is fully integrated with the operations, marketing, and finance departments, dealing with various activities that directly involve bringing different kinds of people together to achieve a common purpose. These activities include, but are not limited to; recruitment and selection practices, training and development, incentive systems (including remuneration, appraisal, promotion and career advancement), and work organisation which involves job design, and the distribution of authority among managers and workers (Bloom & Van Reenen, 2011: ; Chuang & Liao, 2010:154; Grobler et al., 2011:9-11; Kozlowski, 2011:282; Lengnick-Hall, Lengnick-Hall, Andrade & Drake, 2009:64; Snell & Bohlander, 2010:4). International Human Resource Management (IHRM) encompasses HRM in enterprises that operate on a global scale, in countries other than that of the multinational s headquarters. IHRM is therefore the global management of employees within a multinational enterprise, with staffing, performance and compensation activities complicated by profound differences between languages, cultures, and legal, political and economic systems (Grobler et al., 2011:639; Hill, 2011:604; Lengnick-Hall et al., 2009:64; Sheehan & Sparrow, 2012:2396; 23

41 Van den Born & Peltokorpi, 2010:97). Beardwell and Claydon (2010:19) define IHRM as a set of distinct activities, functions and processes that are directed towards attracting, developing and maintaining human resources in a multinational corporation. IHRM places greater emphasis on functions and activities such as relocation, orientation and translation services than domestic HRM, in order to assist expatriates with adapting to foreign cultures. IHRM has developed from a focus on staffing decisions to the evaluation of international business and strategy. Ghafoor et al. (2011:336) discuss the role that IHRM plays in gaining competitive advantage over other enterprises, through the reduction of costs and improvements in global sourcing of products and services THE DIFFERENCE BETWEEN HRM AND IHRM According to Dowling, Festing and Engle (2008:5), Hill (2011:604), and Scullion and Linehan (2005:5), the two variables which differentiate domestic HRM from IHRM are the complexities of operating in a global environment, as well as dealing with employees from diverse cultural backgrounds. While domestic HRM is concerned with employees within one national boundary, IHRM deals with the parent country, the host country, and other countries from which the enterprise may source materials or services. IHRM also involves three types of employees: parent-country nationals, host-country nationals and third-country nationals. When operating in multiple foreign environments, multinationals are faced with issues such as international taxation and relocation, host-government relations and labour laws, language and cultural barriers, and orientation and training programmes. Human Resources (HR) staff are required to have a broader perspective on issues, as they deal with employees from different countries and cultures who have different work ethics and lifestyle preferences. While domestic HR usually provides employees with health insurance and basic assistance during relocation, IHRM involves a greater degree of involvement in employees and their families personal lives. In a multinational enterprise, HR personnel need to organise housing and schooling arrangements, healthcare, work visas, appropriate training programmes and also various cost-of-living and premium allowances for expatriates who are assigned to foreign countries. The essence of IHRM is then the knowledge of conditions in a variety of host countries, and how to manage these conditions and differences across global borders (Auzini & Tjakraatmadja, 2012:2; Cascio, 2006:654; Dowling et al., 2008:7; Rahim, 2012:189; Scullion & Linehan, 2005:6; Tornikoski, 2011a:23). 24

42 25 Emma-Louise Webber 2.3. THE STRATEGIC IMPORTANCE OF HUMAN RESOURCE MANAGEMENT According to Barney (1991:105), Bonache and Fernández (1997:459), and Wright, Dunford and Snell (2001:712), sustained competitive advantage is derived from an enterprise s resources and capabilities (including managerial skills, processes and enterprise knowledge) that are valuable, rare, inimitable and non-substitutable. Buller and McEvoy (2009:329) and Carpenter and Sanders (2009:102) state that competitors within a given industry do not have access to the same resources and capabilities, and that an enterprise s resources and capabilities may not be as effective as those of its competitors in sustaining a competitive advantage. Strategic Human Resource Management (SHRM) involves recruiting and developing individuals with knowledge, skills and abilities that are consistent with the enterprise s strategy, enabling the enterprise to create human capital that is valuable, unique, and difficult to replicate, providing it with a competitive advantage. This resource-based view of SHRM seeks to discover how an enterprise s human resources can provide sustainable competitive advantage, which exists when competitors are unable to duplicate the benefits of an existing competitive advantage. For a resource to be the source of sustainable competitive advantage, it must be valuable (V), rare (R), inimitable (I), non-substitutable (N), and exploitable (E). Human resources have the highest probability of being the source of sustained competitive advantage, as they are more likely than other enterprise resources to fulfil the above criteria (Beardwell & Claydon, 2010:50; Carpenter & Sanders, 2009:103; Hitt et al., 2001:13, Kozlowski, 2011: ; Lengnick-Hall et al., 2009:78; McWilliams, Van Fleet & Wright, 2001:5; Snell & Bohlander, 2010:50; Van den Born & Peltokorpi, 2010:102; Wright et al., 1993:2-5) Human Resources as Valuable According to Barney (1991:106), Cardeal and António (2012:10161), and Wright et al. (1993:8), human resources are a source of sustainable competitive advantage when they provide value for an enterprise. Firm Specific Human Capital Theory states that human capital can create value for an enterprise when both the demand for labour is heterogeneous (enterprises have different jobs which require different skills) and the supply of labour is heterogeneous (employees differ in both the types and levels of their skills). This implies that both enterprises and their competitors may require diverse skill sets for their different

43 positions, and that potential employees possess these diverse skills to meet employer requirements, providing an opportunity for value creation within the enterprise. It can then be said that variance exists between individuals contribution value to an enterprise (McWilliams et al., 2001:5; Wright et al., 1993:8). Carpenter and Sanders (2009: ) are of the opinion that valuable resources and capabilities enable an enterprise to take advantage of opportunities in the market and to protect the enterprise from market uncertainties or threats in its environment. They also have the potential to contribute to normal profits, allowing an enterprise to compete in a given industry. The resource-based view suggests that if the HR function is to be a strategic partner in an enterprise, it needs to know which HR aspects contribute the most towards a sustainable competitive advantage, as some aspects may provide greater leverage than others (Beardwell & Claydon, 2010:51). Beardwell and Claydon (2010:51), Cardeal and António (2012:10161), and Lengnick-Hall et al. (2009:70) discuss the fact that an enterprise s human resources can create value by reducing costs and increasing revenue through efficiency, flexible working practices, and customer selection, retention, and referral. These practices have also been found to enhance customer service and customer added value, proving HR to be a valuable enterprise-wide resource. However, Barney (1991:106), Beardwell and Claydon (2010:51), Cardeal and António (2012:10161) and Carpenter and Sanders (2009:105) provide evidence that value alone is insufficient in providing an enterprise with a sustainable competitive advantage, as competitive parity exists when competitors possess the same value as an enterprise. Human resources should then also be rare in nature if they are to provide an enterprise with a sustainable competitive advantage Human Resources as Rare Barney (1991:104), Cardeal and António (2012:10161), and Carpenter and Sanders (2009:105) argue that if competitors possessed the same valuable resource, they would probably make use of it in the same way, ultimately implementing the same value-creating strategy, and reducing the possibility of the organisation s achieving a competitive advantage. HR managers need to be able to develop and exploit rare characteristics of an enterprise s valuable human resources in order to gain a competitive advantage (Beardwell & Claydon, 2010:51; Carpenter & Sanders, 2009:105). 26

44 27 Emma-Louise Webber For example, McWilliams et al. (2001:6) and Wright et al. (1993:10) state that human skills are normally distributed among the population. High-quality human resources may then be classified as rare, with only a few individuals within a human resource pool possessing high skill levels. Cognitive ability is one of the best predictors of work performance and can be seen as a quality measure of human resources. Cognitive ability is then normally distributed in the population, making employees with high ability levels rare. Therefore enterprises with average cognitive ability higher than that of their competitors possess valuable and rare human resources. Enterprises with international operations have access to and can draw from various labour pools, increasing their potential for developing an HR-based competitive advantage. For an enterprise s human resources to be classified as rare does not require exclusive ownership, but rather that the resources or capabilities should be scarce relative to demand (Carpenter & Sanders, 2009:105). In terms of rarity, Barney (1991:107) states that as long as the number of enterprises that possess a specific resource is less than the number required to generate perfect competition within an industry, that resource has the potential to create a competitive advantage Human Resources as Inimitable When an enterprise s human resources are valuable and rare, they are able to provide a temporary competitive advantage. However, if competitors are able to imitate the enterprise s characteristics, then competitive advantage will probably be replaced with competitive parity (Barney, 1991:107; Beardwell & Claydon, 2010:52; Cardeal & António, 2012:10161; Carpenter & Sanders, 2009:105). Unless a resource is impossible, difficult, or costly to imitate, it cannot be a source of sustainable competitive advantage for an enterprise. If the competitive advantage gained from having high-quality human resources can be easily imitated, then an enterprise cannot create a sustainable competitive advantage. In order to imitate a resource, competitors need to be able to identify the source of the competitive advantage, and be able to duplicate both the relevant components of the HR pool and the circumstances under which these resources function (Carpenter & Sanders, 2009:105; McWilliams et al., 2001:6-7; Wright et al., 1993:11). As discussed by Barney (1991: ), Beardwell and Claydon (2010:52), Cardeal and António (2012:10161), and Wright et al. (1993:12), resources are often more difficult to imitate in the presence of unique historical conditions, causal ambiguity, and social

45 complexity. Human resources can be seen as unique in their ability to create and be influenced by these three factors. According to the resource-based view, the ability of an enterprise to acquire and exploit certain resources is partly dependent upon its unique history and culture (Barney, 1991:107; Beardwell & Claydon, 2010:52; Cardeal & António, 2012:10161; Carpenter & Sanders, 2009:106). An enterprise s unique culture, practices, and behaviours enable it to leapfrog its competitors, and they are usually costly or impossible to duplicate. With regard to causal ambiguity, Barney (1991:109), Beardwell and Claydon (2010:52-53), Cardeal and António (2012:10161), and Carpenter and Sanders (2009:107) state that if a competitor is unable to identify the manner in which an enterprise s human resources act as a competitive advantage, or if the link between an enterprise s resources and its competitive advantage is not clearly understood by competitors, it may be impossible for them to imitate the responsible resources. Social complexity, which arises from human interactions and effective teamwork, refers to the fact that many social phenomena, such as relationships between key personnel, are too complex for outsiders to understand and successfully manage or influence to their advantage. A competitive advantage that arises from transaction-specific human capital (such as the knowledge and trust developed over time by personnel, which is of value only to their specific relationship) is valuable, rare and almost impossible to imitate or manipulate in a systematic way (Barney, 1991:110; Beardwell & Claydon, 2010:52-53; Cardeal & António, 2012:10161; Carpenter & Sanders, 2009:107; Wright et al., 1993:12-14). Competitive advantages resulting from an enterprise s culture and norms, or transactionspecific human capital can only be duplicated if a competitor is able to identify and replicate the exact historical occurrences, political alliances, programmes, and employee personalities and relationships within an enterprise. Existing contingencies among enterprises make it almost impossible to imitate such competitive advantages (Carpenter & Sanders, 2009: ; McWilliams et al., 2001:7; Wright et al., 1993:14) Human Resources as Non-Substitutable If human resources are to be the source of competitive advantage for an enterprise, they must be valuable, rare, inimitable, and not have viable substitutes. If other resources (such as technology) are able to successfully act as a substitute for advantages associated with human 28

46 29 Emma-Louise Webber capital, then human resources do not have the potential to become a sustainable competitive advantage (Barney, 1991:111; Carpenter & Sanders, 2009: ; Wright et al., 1993:15). Non-substitutability is realised if competitors are unable to achieve the same benefit using different combinations of similar resources and capabilities (Barney, 1991:111; Carpenter & Sanders, 2009:106). McWilliams et al. (2001:7-8) and Wright et al. (1993:15-16) maintain that human resources have the potential to not become obsolete, as well as to be transferred across various technologies, products and markets. For example, if an enterprise s employees have high levels of cognitive ability; constant state-of-the-art technological training will ensure that their abilities do not become obsolete. This cognitive ability may also be transferred across various technologies, products and markets. It may be possible to substitute HR with other resources (technologies) in the short term, but as these resources are not rare, inimitable, or non-substitutable, they will soon be imitated by competitors, and human resources will again constitute a competitive advantage. It is therefore unlikely that such a substitution would provide an enterprise with a sustainable competitive advantage. According to Barney (1991:111), a competitor may imitate an enterprise s high-quality top management team, but may be unable to copy the team exactly. This may result in a unique management team that is strategically equivalent to the enterprise s management team, proving to be a viable substitute. According to this resource-based view, if certain aspects of an enterprise s human resources do not provide value, they can only be a source of competitive disadvantage and should be discarded. Aspects that are valuable and rare, but that can be duplicated or substituted provide enterprises with only a temporary competitive advantage that is likely to be copied by competitors. Therefore, Beardwell and Claydon (2010:54), Carpenter and Sanders (2009:103), Lengnick-Hall et al. (2009:71), and Wright et al. (1993:16) state that human resources that can be classified as a source of sustainable competitive advantage provide value to an enterprise, are rare, and are difficult to imitate or substitute Human Resources as Exploitable According to Buller and McEvoy (2009:329), Carpenter and Sanders (2009: ), and Hitt et al. (2001:23), the mere possession of or control over a resource or capability is necessary, but does not provide an enterprise with a competitive advantage. An enterprise must be able to nurture and take advantage of the resources or capabilities that it possesses. If an enterprise is unable to exploit the resource or capability, it will not gain many benefits

47 30 Emma-Louise Webber even if the resource satisfies the above four criteria, and may inevitably increase its opportunity costs and decrease its financial performance INTERNATIONAL STRATEGIES According to Bartlett and Ghoshal (1989:13), Beardwell and Claydon (2010:649), and Snell and Bohlander (2010:658), enterprises differ in the extent to which they participate in global competition. International operations may take the form of an international enterprise, a multinational enterprise, a global enterprise or a transnational enterprise. The chosen international strategy affects the decision on which country the employees will be hired from, influencing which staffing policy the enterprise will put in place (Konopaske, Werner & Neupert, 2002:762) International Enterprise An international enterprise is formed when a domestic enterprise builds on its existing capabilities to expand into international markets. According to Bartlett and Ghoshal (1989:15), Grobler et al. (2011:637), and McWilliams et al. (2001:2), the strategy of an international enterprise is based primarily on transferring and adapting the parent enterprise s knowledge and capabilities to suit foreign markets. Because they experience low pressure for both cost reductions and local responsiveness, these enterprises sell domestic products in international markets with only minimal customisation. The headquarters of international enterprises have less control and influence over subsidiaries, making it less efficient than a global enterprise. Subsidiaries also have less independence when adapting products and services to suit local markets, making them less responsive than multidomestic enterprises. However, international enterprises do not face significant competition in foreign markets, minimising the need for customisation or a low cost structure (Bartlett & Ghoshal, 1989:59; Beardwell & Claydon, 2010:650; Hill, 2011:422; Snell & Bohlander, 2010:658) Multidomestic Enterprise A multidomestic enterprise has independent subsidiaries operating in multiple countries under high pressure for local customisation and low pressure to reduce costs. The purpose of a multidomestic is to build strong local presence through sensitivity and responsiveness to cultural and regulatory differences between international markets (Bartlett & Ghoshal, 1989:14; Beardwell & Claydon, 2010:650; Hill, 2011:420). A multidomestic makes use of decentralised decision making, with limited control over subsidiaries, and takes advantage of

48 31 Emma-Louise Webber globally dispersed resources, enabling it to respond to local needs. However, efficiency is reduced due to the fragmentation of activities, and enterprise learning suffers, as knowledge is not transferred between subsidiaries and headquarters. A multidomestic enterprise is appropriate when the added value associated with local customisation supports higher pricing, or increases demand, enabling the enterprise to reduce costs through economies of scale (Bartlett & Ghoshal, 1989:59; Beardwell & Claydon, 2010:650; Grobler et al., 2011:637; Hill, 2011:421; Lockett, Thompson & Morgenstern, 2009:19; Snell & Bohlander, 2010:658) Global Enterprise According to Bartlett and Ghoshal (1989:14), Beardwell and Claydon (2010:650), Grobler et al. (2011:637), and McWilliams et al. (2001:3), a global enterprise maintains control of its worldwide operations from its headquarters in the parent country, marketing a standardised product worldwide in order to achieve economies of scale through the integration of global production processes. Global enterprises are driven by a need for global efficiency, building low-cost advantages through centralised decision making and global-scale operations. Although global enterprises are efficient when managing innovations (creating new products at low cost and high speed), they have neither the motivation nor the ability to respond to the needs of local markets. Enterprises experience high pressure for cost reductions and low pressure for local responsiveness. Those at headquarters fail to understand market needs and production realities outside their home country, which prevents them from taking advantage of learning opportunities in other markets (Bartlett & Ghoshal, 1989:58-59; Beardwell & Claydon, 2010:650; Hill, 2011: ; McWilliams et al., 2001:3; Snell & Bohlander, 2010:658) Transnational Enterprise Findings from Bartlett and Ghoshal (1989:59), supported by Hill (2011:421) and McWilliams et al. (2001:3), indicate that a transnational enterprise attempts to overcome the inefficiencies of global, multidomestic and international enterprises. It takes advantage of a multidomestic s local responsiveness, as well as the efficiency of a global enterprise, experiencing high pressure for both cost reductions and local responsiveness. Transnational enterprises aim to simultaneously develop and exploit knowledge on a global basis, and achieve global efficiency to improve competitiveness, as well as national responsiveness to develop enterprise-wide flexibility.

49 Pressure for Cost Reductions Low High Emma-Louise Webber A transnational enterprise both centralises and decentralises its resources and capabilities to simultaneously take advantage of scale economies, to protect core capabilities, create flexibility and to reduce dependence on a single facility. As mentioned by Ball, Geringer, McNett and Minor (2012:240), upstream value-chain activities (product development, raw materials sourcing and manufacturing) tend to be centralised, while downstream activities, including marketing and sales, tend to be decentralised and located in close proximity to the customer. Transnationals create products with features that can be differentiated by market, while the core design and basic elements are standardised. Although centrally designed products are still important, innovations are often created by subsidiaries, as transnational enterprises recognise that different components of an enterprise possess different capabilities (Bartlett & Ghoshal, 1989:57-65; Beardwell & Claydon, 2010:650; Grobler et al., 2011:637; Snell & Bohlander, 2010:658). Figure 2.1 International Strategies Global Standardisation Strategy Transnational Strategy International Strategy Multidomestic Strategy Low High Pressure for Local Responsiveness Source: Ball, Geringer, Minor & McNett (2010:375) 32

50 2.5. TYPES OF STAFFING POLICY In his seminal work, Perlmutter (1969:12) identified three staffing policies used by enterprises, namely ethnocentric, polycentric, and geocentric, while according to Beardwell and Claydon (2010:657), Grobler et al. (2011:640), and Reiche and Harzing (2009:4), a regiocentric approach was added in a later publication by Heenan and Perlmutter (1979:70). According to Ando et al. (2007:115), Briscoe et al. (2009:165), and Perlmutter (1969:12), these staffing policies, which form part of IHRM, bring about numerous challenges for multinational enterprises, as they recruit and retain employees sourced from multiple global locations, constantly having to consider and manage the various differences in language, cultural, and legal systems Ethnocentric Staffing Policy Briscoe et al. (2009:165), Grobler et al. (2011:640), and Kang and Shen (2013:2) state that multinationals making use of an ethnocentric staffing policy hire employees from the country where the headquarters are situated, and send these employees on international assignments to foreign subsidiaries for periods greater than one year. An ethnocentric mindset is used in conjunction with an international enterprise strategy and tends to focus on transferring the enterprise s home-country values and operations to subsidiaries. Top positions in subsidiaries are therefore filled by parent-country nationals (expatriates), enabling MNEs to maintain control and coordination over subsidiaries, since parent-country nationals better understand and internalise common values and goals of the enterprise (Ando et al., 2007:115; Briscoe et al., 2009:165; Dörrenbächer & Geppert, 2010:603; Grobler et al., 2011:641; Hill, 2011:609; Lam & Yeung, 2008:680; Perlmutter, 1969:12; Snell & Bohlander, 2010:664; Van Aswegen, 2008:42). An ethnocentric staffing policy is commonly used during the early stages of international expansion, as a detailed knowledge of enterprise policies and procedures is often necessary when enterprises export their business models into foreign countries. However, an ethnocentric staffing policy may impose an inappropriate home-country management style, is usually more expensive than other staffing policies, and often implies blocked promotional paths for locals in the host country (Cascio, 2006:640; Grobler et al., 2011:640; Heenan & Perlmutter, 1979:71; Kang & Shen, 2013:2). 33

51 Polycentric Staffing Policy When using a polycentric staffing policy, multinationals make use of a multidomestic strategy and prefer to hire local natives from the host country into the foreign subsidiary. A polycentric mindset focuses on host-country values and ways of operating, under minimal control by headquarters. These host-country nationals are typically put in charge, allowing subsidiaries to act as distinct national entities with considerable decision-making authority (Beardwell & Claydon, 2010:657; Briscoe et al., 2009:165; Dörrenbächer & Geppert, 2010:603; Grobler et al., 2011:640; Hill, 2011:609; Perlmutter, 1969:13; Reiche & Harzing, 2009:3; Snell & Bohlander, 2010:664; Van den Born & Peltokorpi, 2010:98). Colakoglu et al. (2009:1293), Grobler et al. (2011:641), Kang and Shen (2013:2), and Perlmutter (1969:12) discuss how this polycentric approach allows multinationals to take advantage of lower local salaries, improve HCN morale, and to effectively deal with language and cultural barriers that could arise if employees from the multinational s headquarters (expatriates) were used. Cascio (2006:640) is of the opinion that by hiring hostcountry nationals, an enterprise is able to eliminate language and cross-cultural barriers, which reduces the need for expensive training programmes Geocentric Staffing Policy Colakoglu et al. (2009:1293) state that a geocentric staffing policy involves a diverse staffing composition in which parent-country, host-country or third-country nationals can be found in key positions anywhere in a multinational s global operations. Enterprises using a geocentric staffing policy implement either a global standardisation or a transnational strategy. This approach focuses on global values and seeks the best people for key jobs regardless of their nationality, rewarding employees for cross-national service (Beardwell & Claydon, 2010:657; Briscoe et al., 2009:165; Cascio, 2006:640; Grobler et al., 2011:641; Hill, 2011:609; Perlmutter, 1969:13; Reiche & Harzing, 2009:4). Although a geocentric staffing policy enables enterprises to develop a pool of senior international managers, this approach can prove to be expensive for enterprises, as training and relocation costs increase when transferring managers between countries. It may also be difficult and take considerable time to implement, and often requires centralised control over managers, which may lead to resentment (Cascio, 2006:640; Grobler et al., 2011:642; Kang & Shen, 2013:3). 34

52 Regiocentric Staffing Policy When using a regiocentric approach, multinationals make use of a global standardisation strategy and divide operations into geographical areas (for example Europe), and employ, develop and transfer the best third-country nationals within these regions. Although headquarters has reduced control over subsidiaries, this policy enables enterprises to respond effectively to local conditions, while taking advantage of lower salary and benefit requirements. A regiocentric approach makes it easier for international managers to transfer between subsidiaries; however, it may limit a manager s career advancement to that in a given region (Beardwell & Claydon, 2010:657; Briscoe et al., 2009:165; Grobler et al., 2011: ; Heenan & Perlmutter, 1979:71; Kang & Shen, 2013:3; Reiche and Harzing, 2009:4; Van Aswegen, 2008:43) EXPATRIATES According to Cascio (2006:628), Cascio and Aguinis (2011:397) and Grobler et al. (2011:640), an expatriate (or international assignee) is any citizen of one country who is working outside his or her home country with a planned return to that or a third country; or, as defined by Briscoe et al. (2009:165) and Haile et al. (2007:100), a citizen of one country who is assigned to another country to work in a foreign subsidiary, or other type of operation, for a multinational enterprise for more than one year. Cascio and Aguinis (2011:397) also refer to expatriates as foreign-service employees who staff most international operations. Fenton (2010:iii) and Ghafoor et al. (2011:334) describe expatriates as any professionals who live in a country other than their own, and temporarily work there for the same enterprise as they did in their home country. Many managers make the decision to transfer internationally without being assigned to a host location by the enterprise (Doherty et al., 2011:596; Fenton, 2010:2; Froese, 2011:1107; Thorn, 2009:443). These expatriates secure a job in host countries on their own initiative without necessarily having a predetermined return schedule (Inkson, Arthur, Pringle & Barry, 1997:359; Tornikoski, 2011a:3). According to Selmer and Lauring (2012:667), these foreign nationals are under regular employment and can be referred to as self-initiated expatriates (SIEs). However, this type of SIE does not fall within the scope of this study. An alternative form of an expatriate is an inpatriate. Briscoe et al. (2009:166), Grobler et al. (2011:640) and Moeller, Harvey and Williams (2010:170) define an inpatriate as a manager 35

53 who is transferred from an MNE s subsidiary to the headquarters for a specific period of time. Inpatriates transfer knowledge between subsidiaries and the parent enterprise and are exposed to the parent enterprise s culture, policies and practices. Inpatriation therefore helps to transfer knowledge, improve headquarter-subsidiary relationships and develop successful international managers (Hill, 2011:609; Moeller et al., 2010:170; Reiche & Harzing, 2009:21-22). Expatriates are often sent on international assignments to transfer the corporate culture and processes to foreign subsidiaries, whereas inpatriates need to adjust not only to the parentcountry s culture but also to the MNE s corporate culture. Inpatriates also increase the cultural diversity at the MNE s headquarters, fostering a geocentric staffing policy, while expatriates often reflect an ethnocentric staffing policy (Ando et al., 2007:115; Colakoglu et al., 2009:1293; Grobler et al., 2011:642; Reiche & Harzing, 2009:22). Three of the four staffing policies discussed above, namely ethnocentric, geocentric and regiocentric, make use of expatriates, while enterprises using a polycentric staffing policy employ locals from the host country (Briscoe et al., 2009:165; Colakoglu et al., 2009:1293; Grobler et al., 2011:640; Hill, 2011:609) Sources of Personnel According to Briscoe et al. (2009:165), Dowling and Welch (in Huynh et al., 2007:5), Reiche and Harzing (2009:5), and Snell and Bohlander (2010:664), expatriation can take three forms, namely that of parent-country nationals, host-country nationals and third-country nationals Parent-Country Nationals Briscoe et al. (2009:165), Snell and Bohlander (2010:664), and Tarique, Schuler and Gong (2006:209) state that parent-country nationals (PCNs) are citizens of the country in which the enterprise s headquarters are situated, who are employed by the head office and transferred temporarily to a foreign subsidiary. Dowling and Welch (in Huynh et al., 2007:5) define parent-country nationals as employees of the parent enterprise that are transferred to a hostcountry subsidiary. Reiche and Harzing (2009:5) state that a PCN s nationality is the same as that of the parent country. Parent-country nationals tend to have the greatest potential to influence a subsidiary s performance, due to the strategic leadership positions they fill and the role they play in transferring firm-specific knowledge and corporate culture to subsidiaries (Colakoglu & Caligiuri, 2008:1; Frändberg & Kjellman, 2005:1). PCNs have 36

54 three essential competencies: they are familiar with the MNE s corporate culture, they communicate effectively with headquarters, and they maintain control over subsidiaries operations (Dörrenbächer & Geppert, 2010:603; Tarique et al., 2006:211). Although the term expatriate means any employee that is working outside his or her home country (Reiche & Harzing, 2009:5), for the purposes of this research an expatriate will refer to a parent-country national, as this is the most common form used in multinational enterprises, and the reliance on PCN expatriates will continue to increase as FDI grows (Briscoe et al., 2009:165; Huynh et al., 2007:6; Colakoglu & Caligiuri, 2008:1) Host-Country Nationals Host-country nationals (HCNs) are employees sent from the host subsidiary to the parent country or, as defined by Tung (1982:59), are citizens of the country of foreign operation. Reiche and Harzing (2009:5) as well as Snell and Bohlander (2010:664) state that an HCN is a native of the host country whose nationality is the same as that of the enterprise s local subsidiary. According to Dörrenbächer and Geppert (2010:603), Tarique et al. (2006:211) and Van den Born and Peltokorpi (2010:104), HCNs usually lack familiarity with the parentcountry culture; however, they have two core competencies: they are familiar with the hostcountry s cultural, economic, political and legal environments, and they are able to respond effectively to the host country s requirements for localisation of the subsidiary s operations (Tarique et al., 2006:211). According to Grobler et al. (2011:641), Reiche and Harzing (2009:6), Snell and Bohlander (2010:665) and Van den Born and Peltokorpi (2010:108), host countries often restrict enterprises staffing options by passing laws and regulations designed to promote the recruitment and selection of host-country nationals. Tax incentives, tariffs, and quotas are also instituted by countries to encourage enterprises to hire local employees. When enterprises expand their operations internationally, they initially send expatriates from the parent enterprise to the host country, to establish activities and to work with local governments. Once operations are established, host-country nationals are hired to manage foreign subsidiaries, as they are less costly than expatriates and more aware of the cultural and political systems in place in the host country. 37

55 Third-Country Nationals Third-country nationals (TCNs) are those employees who are sent from one foreign subsidiary to another that is also owned by the same enterprise. When an enterprise hires a citizen of a country other than the parent or subsidiary countries to work in a foreign subsidiary, the expatriate may be referred to as a third-country national (Briscoe et al., 2009:166; Cascio & Aguinis, 2011:397; Dowling & Welch in Huynh et al., 2007:5; Snell & Bohlander, 2010:664; Tung, 1982:59). According to Reiche and Harzing (2009:5), Snell and Bohlander (2010:664), and Tarique et al. (2006:211), the nationality of a TCN is neither that of the parent nor the subsidiary. TCNs are less expensive to maintain; however, they are often unfamiliar with the MNE s corporate culture. While expatriates are still used to transfer skills and corporate advantages or control operations, the use of third-country nationals is becoming more popular, as they are less costly to an enterprise and are usually multilingual, enabling them to adjust more easily to foreign cultures (Grobler et al., 2011:641; Snell & Bohlander, 2010:670; Van den Born & Peltokorpi, 2010:108) Strategic Role of Expatriates International assignments play a strategic role in the success of any business venture and have become an integral part of multinationals business strategies (Riusala & Suutari, 2004:745; Van Aswegen, 2008:2). Expatriate staff can be considered a valuable firm resource that has a critical impact on the performance of the local subsidiary (Lam & Yeung, 2008:678). Ando et al. (2007:115), Bolino (2007:824), Huang, Wang, Tzeng and Lin (2011:[1]) as well as Tungli and Peiperl (2009:155) mention three reasons for expatriates that were originally categorised by Edström and Galbraith (1977:253): to fill positions, to develop managerial skills and to develop the enterprise through control and coordination. Tungli and Peiperl (2009:160) mention various other reasons for sending expatriates to foreign countries, that are supported by Gomez-Mejia, Balkin and Cardy (2010: ). These reasons include: to set up new operations, to fill a skills gap in a local subsidiary, to develop the individuals international skills, to train and orient local staff, to control and coordinate operations with headquarters and to establish and maintain a global corporate culture within a multinational enterprise. 38

56 39 Emma-Louise Webber Ghafoor et al. (2011:336), Lyles and Salk (2007:15), and Wang, Tong, Chen and Kim (2009:1182) are of the opinion that expatriates are effective vehicles for knowledge acquisition and transfer in multinational enterprises, and in turn enhance subsidiary performance. Knowledge transfer in this context can be defined as the process through which a foreign subsidiary observes and learns from the experience of another (skills that often cannot be recorded in manuals). The sharing and combination of enterprise-specific knowledge among subsidiaries is often a source of competitive advantage for multinationals, as enterprise knowledge is extremely hard to imitate (Beardwell & Claydon, 2010:52-53; Cardeal & António, 2012:10161; Ghafoor et al., 2011:336). Although employing local staff may save costs and enhance goodwill, Lam and Yeung (2008:692), Colakoglu et al. (2009:1291), Gomez-Mejia et al. (2010:574) and Riusala and Suutari (2004:745) state that expatriates often serve as a link between headquarters and subsidiaries in order to maintain corporate control over these subsidiaries, and to ensure the effective transfer of corporate advantages to foreign subsidiaries and successful integration across the global enterprise. Bonache and Fernández (1997:461) state that once knowledge has been transferred to foreign subsidiaries, an expatriate may remain in the host country for the sole purpose of control. Expatriates have an excellent understanding of headquarters rules and systems, allowing them to effectively implement control mechanisms and operating procedures that are in line with those of the enterprise s headquarters (Ghafoor et al., 2011:336; Hodgetts & Luthans, 1993:58) Duration of Expatriate Assignments Briscoe et al. (2009:165), Grobler et al. (2011:643), Konopaske and Werner (2005:1160), and Stroh et al. (2000:681) state that employees are transferred to subsidiaries for varying lengths of time, depending on the purpose of the assignment. Short-term assignments usually last for a period of less than three months; extended assignments can last up to a year, while long-term assignments (frequently referred to as expatriate assignments) typically last up to five years. According to Doherty, Dickmann and Mills (2011:596) and Thomas (in Els, 2007:11), expatriate managers are usually accompanied by their families on international assignments that typically last for a period of three to five years. Collings, Scullion and Morley (2007:205), Konopaske and Werner (2005:1160), and Reiche and Harzing (2009:23) mention that multinationals are being forced to vary the length of international assignments, as many potential candidates are reluctant to leave their home

57 country for multiple-year assignments. Employees fear the loss of career advancement opportunities at the enterprise s headquarters, as well as the potential disruption in their spouses careers. As a result, short-term assignments, which typically last between one and twelve months, are becoming more common. With short-term assignments, family disruption is often avoided, as managers are rarely accompanied by their spouse and children. Such assignments are cost effective, more flexible and timely, and require less bureaucratic effort than traditional expatriate assignments; however, short-term assignees often fail to develop effective relationships with local colleagues, minimising their ability to transfer knowledge or train host nationals (Konopaske & Werner, 2005:1160; Reiche & Harzing, 2009:23) Reasons for Accepting an International Assignment In a 2002 study Richardson and McKenna (in Selmer & Lauring, 2010:170) identified five primary reasons why employees accept international assignments. These reasons are supported by various studies (Richardson in Fenton, 2010:48; Thorn, 2009:449) which identified dominant and subsidiary drivers for expatriation. These reasons include: An Opportunity for Change An expatriate may transfer abroad in order to avoid negative working or living conditions within the home country. Poor or deteriorating living or working conditions and job opportunities in the home country are considered a push factor for relocating overseas, and may drive managers to become expatriates in order to support themselves and their families in the future (Dickmann, Doherty, Mills & Brewster, 2008:742; Doherty et al., 2011:606; Froese, 2011:1100; Richardson & Zikic, 2007:166; Stahl, Miller & Tung, 2002:220). Financial Incentives Working abroad is often associated with better remuneration and an improved economic situation. According to Dickmann et al. (2008: ), Doherty et al. (2011:600), Froese (2011:1100), and Stahl et al. (2002:220), financial considerations have been found to be a primary driver in the decision to accept an international assignment. Attractive job conditions such as an increased salary or a more lucrative research environment may motivate a manager to become an expatriate. 40

58 Family Reasons The willingness of an expatriate s spouse and family to move often plays a major role in a manager s decision to relocate abroad. Relocating to a foreign country may be in the best interests of the expatriate s family, as the host country may be the home country of the manager s spouse, or it may present a good educational opportunity for the expatriate s children (Cho et al., 2013:1061; Dickmann et al., 2008:741; Doherty et al., 2011:606; Froese, 2011:1100; Stahl et al., 2002:220). Therefore an expatriate spouse s previous international experience is usually considered before accepting an international assignment (Cho et al., 2013:1061). A Desire for Adventure and Travel Common reasons for expatriation include a desire to see more of the world, to search for new experiences and a desire for new challenges. Managers may have the desire to travel and to experience new things overseas or to gain knowledge of foreign languages and cultures (Doherty et al., 2011:601; Froese, 2011:1100; Inkson et al., 1997:359). Richardson and Zikic (2007:164) state that international careers often involve activities that enhance environmentexploration. Career Building Many managers relocate abroad with a desire to enhance their career prospects. They assume the experience will have a positive effect on their career development, or they believe it is an internal requirement for certain promotions within the enterprise. According to respondents in studies by Cho et al. (2013:1060) and Dickmann et al. (2008:740), expatriates chose to accept international assignments as they felt it was a good opportunity to further their career, develop leadership skills, and gain the necessary international experience for further promotion. Findings from Doherty et al. (2011:601) indicate that an assignment s impact on career was the most influential factor in an expatriate s decision to relocate overseas with the enterprise. International assignments have been known to offer opportunities for skill acquisition and career development (Dickmann et al., 2008:740; Richardson & Zikic, 2007:164; Stahl et al., 2002:220; Thorn, 2009:449). 41

59 A study by Stahl et al. (2002:220) found that 69 percent of respondents were of the opinion that a manager may decline an international assignment once at most without it having a negative impact on his or her future career advancement, while 61 percent felt that their rejection of an international assignment would limit their advancement within the enterprise. The majority of respondents anticipated serious negative consequences for their careers if they refused an international assignment. This is supported by Bolino (2007:833), who states that refusing one international assignment may be acceptable, but refusing multiple assignments may do great harm to one s career prospects within the enterprise EXPATRIATE FAILURE Expatriate failure can be seen as either underperformance by the expatriate during the international assignment, the premature return of the expatriate, or repatriate failure on returning to the home country (Briscoe et al., 2009:180; Ghafoor et al., 2011:336; Harzing, 2004:274; Shen, 2005:657; Swarts & Du Plessis, 2007:48; Templer, 2010:1754). Situations that result in the expatriate s withdrawing from active involvement in the workplace, being unable to adjust to the local culture, actively or passively avoiding tasks and/or taking a significantly long time to acquire the necessary skills, are all forms of expatriate failure (Fenton, 2010:40). In their study on the topic, Tye and Chen (2005:16) note that 10 to 20 percent of expatriates return prematurely to their home country, and that approximately one-third of those who do not return early underperform and usually do not meet their enterprise s expectations. A study by Tung (1982:68) reports high failure rates in United States (US), European and Japanese multinationals. Seven percent of US firms indicated a failure rate of 20 to 40 percent; 69 percent of the firms had a failure rate of 10 to 20 percent, while the remaining 24 percent of firms had failure rates below 10 percent. The failure rates were lower in European and Japanese multinationals (rarely exceeding 10 percent), which Briscoe et al. (2009:180) and Tung (1982:68) attribute to the fact that European and Japanese expatriates are able to adapt more easily to a foreign environment. Shay and Tracey (1997:31) state that US expatriate failure rates (defined as the premature return of an expatriate) are estimated to be between 25 and 40 percent when the expatriate is assigned to a developed country and 70 percent for a developing country. This is supported by Briscoe et al. (2009:182) who mention that US failure rates range between 10 and 80 percent, with a common rate in the 30 to 40 percent range. A study of United Kingdom (UK), US, Japanese and German multinationals by Tungli 42

60 and Peiperl (2009:167) indicates an average premature return rate of 6.3 percent. Moreover, Copeland and Griggs (in Shay & Tracey, 1997:31) estimate that 30 to 50 percent of expatriates who complete their assignments underperform. Swarts and Du Plessis (2007:48) and Vögel, Van Vuuren and Millard (2008:34) report that the full extent of this problem in South Africa is difficult to determine, as research is often done on behalf of individual organisations and is confidential or expensive to acquire. However, a survey by Van Heerden and Wentzel (in Van Aswegen, 2008:47) indicates a 9 percent expatriate turnover, rate while Hawley (in Swarts & Du Plessis, 2007:48) states that between 25 and 40 percent of South African expatriates leave their international assignments early. Findings from Swarts and Du Plessis (2007:62) indicate that the intention to quit a foreign assignment in Africa is 51 percent, while it is lower (36 percent) for expatriates stationed in developed countries or regions such as Europe or the US. A study by Els (2007:109) found that South African expatriates working in sub-saharan African countries have a seven times greater chance of failure (at 36 percent) than those working in first-world countries (at 5 percent). The overall failure rate for South African expatriates was found to be 22 percent. Failure rates have therefore been proven to be higher for expatriates on assignment in developing countries than those stationed in developed or first-world countries. South African failure rates are in line with international rates (Van Aswegen, 2008:47) and as most South African multinationals expand their operations into Africa, the expatriate selection and training processes need to be managed more effectively Costs of Expatriate Failure Expatriate failure creates excessive direct and indirect costs for the individual and the enterprise that could be avoided (Mendenhall & Oddou, 1985:39; Templer, 2010:1754; Tye & Chen, 2005:16). According to Harzing (2004:274), Templer (2010:1754), and Tungli and Peiperl (2009:157), the expatriate incurs personal costs, including damage to the expatriate s career, self-esteem and relationships, and stress or health problems as well as family conflict. Haile et al. (2007:101), Shen (2005:657) and Templer (2010:1754) point out that direct costs for the enterprise include the expatriate s salary, training, travel and relocation expenses. If the employee underperforms, the enterprise also suffers from costs associated with the loss of goodwill and reputation, and delayed productivity (Graf & Harland, 2005:46; Haile et al., 43

61 2007:101). Indirect costs arise if the relationship with the host country is damaged, if there are damages to the enterprise s reputation and image, or if market share or business opportunities are lost (Graf & Harland, 2005:46; Haile et al., 2007:101; Harzing, 2004:274; Shen, 2005:657; Templer, 2010:1754). A high incidence of expatriate and repatriate failure in an enterprise will reduce the willingness of other home-country managers to relocate for future international assignments (Harzing, 2004:274). The average cost per failure to the enterprise can be as high as two and a half times the expatriate s annual domestic salary plus the cost of relocation (Anderson, 2005:572). Briscoe et al. (2009:182), Graf and Harland (2005:46), and Carpenter et al. (2007:[5]) estimate the value of these failures to generally range between US$ and US$1.2 million, while Yeaton and Hall (2008:75) state that the losses as a result of these failures range between US$ and US$1 million. In South Africa, Grobler et al. (2011:642) and Van Aswegen (2008:45) state that an expatriate s cost to company (including salary, relocation expenses and benefits) can amount to an estimated R1 million per year, which is lost in the case of a failed assignment Reasons for Expatriate Failure Expatriate failure is seldom a result of poor professional or technical competence (which usually prevents immediate failure on the job), but is rather due to family and personal issues, or a lack of cross-cultural skills that inhibits an expatriate s adjustment to the foreign environment (Andreason, 2008:382; Dowling & Welch in Huynh et al., 2007:11; Els, 2007:68; Hurn, 2007:9; Reiche & Harzing, 2009:29; Shen, 2005:657; Shay & Tracey, 1997:31). However the candidate s personality traits, cultural adaptability and spouse are rarely evaluated in the selection process. (Briscoe et al., 2009:179; Tungli & Peiperl, 2009:162). Several authors have identified the following as common causes of failure among US expatriate managers (Anderson, 2005:568; Briscoe et al., 2009:165; Gomez-Mejia et al., 2010:576; Grobler et al., 2011:642; Haile et al., 2007:101; Tung, 1981:76): Inability of the manager s spouse to adapt to the new environment The manager s inability to adapt to the new environment Other family-related problems 44

62 The manager s personal or emotional immaturity The manager s inability to handle the larger responsibilities associated with international assignments The manager s lack of technical competence The manager s lack of motivation The most common reasons for failure among South African expatriates, as identified by Hawley (in Van Aswegen, 2008:54), are: A poor understanding of the foreign culture and language An unwillingness to train the host nationals Insufficient preparation of the expatriate and the family An ethnocentric attitude (feeling that one s own culture is superior to another). In a study by Els (2007:112), respondents who failed during their international assignment indicated the following as the top five challenges they faced while overseas: an inability to cope with a larger assignment, expatriate adjustment issues, the spouse s inability to adjust, other family problems and a lack of technical competence. According to Eastwood and Renard (2008:1), Els (2007:114), and Lund and Degen (2010:62), failure may result from inadequate cultural and language training, a lack of cross-cultural skills and motivation, mistakes made in the selection process, expatriate personality difficulties, an inability to cope with the foreign environment, or a poor quality of life during the assignment. Additional reasons for failure include culture shock, differences between home and host country working environments, feelings of isolation and homesickness, and housing or educational difficulties (Anderson, 2005:568; Fenton, 2010:117). Family problems have a negative impact on an expatriate s performance and ability to adjust to the host environment. The reason most often cited for premature return and expatriate failure is therefore the inability of the expatriate and/or the travelling partner and family to adapt to the host country s culture (Cho et al., 2013:1069; Doherty et al., 2011:605; Eastwood & Renard, 2008:1; Fenton, 2010:97; Ghafoor et al., 2011:344; Tungli & Peiperl, 2009:156). Van Heerden and Wentzel (in Van Aswegen, 2008:54) indicate that 62 percent of 45

63 failed assignments are due to personal reasons (spouse, family and adjustment), 10 percent are due to health-related reasons and 28 percent to performance issues. This coincides with the causes of failure among US expatriates and emphasises the role of the family in the adjustment process The Concept of Expatriate Failure Contested Christensen and Harzing (2004:616) challenge the concept of expatriate failure and urge enterprises to rather draw their focus to performance management and staff turnover. Expatriate failure has been broadly defined to include; premature return, underperformance, an inability to adjust, and repatriation issues, however, Christensen and Harzing (2004:619) point out that a critical, systematic, and integrated approach to this definition is lacking in expatriate literature. The interpretation of the definition is important as premature return may be viewed in a positive light if an expatriate employee returns to their home country due to an internal transfer, whereas an expatriate s premature return due to their inability to adjust may be damaging to the enterprise and therefore seen as failure. The cause of the expatriate s premature return should be seen as the distinguishing factor between success and failure (Christensen & Harzing, 2004:621). Christensen and Harzing (2004:619) further point out that existing literature tends to label expatriate failure as a negative aspect that is damaging to the enterprise, and not necessarily the expatriate (as would be the case with redundancies). Christensen and Harzing (2004:619) argue that the term expatriate failure is empty and should be abandoned, and that enterprises should rather focus on customising their performance management and turnover strategies for expatriate management SELECTION Carpenter et al. (2007:[5]), Ghafoor et al. (2011:336) and Wang et al. (2009:1182) point out that MNEs generally choose to appoint an expatriate, as opposed to recruiting a local employee, when enterprise-specific knowledge is important, confidentiality or speed is an issue, or when the corporate strategy is focused on global integration. While all MNEs have selection processes in place, some prove to be better than others, as enterprises continue to make the mistake of basing their decisions solely on technical know-how and enterprise experience (Anderson, 2005:569; Hays, 1971:46; Reiche & Harzing, 2009:28; Tung 1981:70). 46

64 Ninety percent of all enterprises have been found to base their expatriate selection decisions on technical competence. The primary focus of enterprises during selection is therefore on the perceived ability of the candidate to perform the job requirements (Anderson, 2005:569; Cheng & Lin, 2009:62; Huang, Wan & Tzeng, 2011:2402; Wang et al., 2011:72). Tungli and Peiperl (2009:162) found that the expatriate s willingness to go was the most common selection criterion used by German enterprises; experience was considered important by Japanese enterprises and technical skills by UK and US enterprises, while previous performance in the enterprise was important for all four countries. Briscoe et al. (2009:179), Briscoe and Schuler (quoted by Huynh et al., 2007:14) and Lansing and Boonman (2011:4) mention that selection processes in US MNEs rely heavily on structured interviews, recommendations, formal assessment tests (including, but not limited to, cultural awareness and behavioural assessments, and psychological and cognitive tests), career planning and self-nomination. As stated by Cascio (2006:641), Reiche and Harzing (2009:28) and Tung (1981:70), most managers in MNEs use technical competence and enterprise knowledge as their primary selection criteria, neither of which enables expatriates to adapt to foreign environments, deal with foreign employees or perceive and imitate host-country norms. This continues to be the case even though expatriate failure is rarely a result of managers lacking technical competence, but is rather due to differences in culture and an inability to adjust (Andreason, 2008:382; Shen, 2005:657; Shay & Tracey, 1997:31). The candidate s personality traits, cultural adaptability and spouse are important predictors of expatriate adjustment and success; however, they are rarely evaluated in the selection process (Anderson, 2005:569; Briscoe et al., 2009:179; Cheng & Lin, 2009:6; Tungli & Peiperl, 2009:162). Reiche and Harzing (2009:28) and Tung (1981:69) identify three reasons for this practice: 1. The difficulty of identifying and measuring relevant interpersonal and cross-cultural skills 2. The self-interest of the selectors, who try to minimise the personal risk involved in selecting a candidate who might fail on the job 3. The fact that the selectors are often line managers, following selection criteria set out by the human resources department 47

65 A common approach to expatriate selection involves transferring managers with impressive domestic track records to foreign subsidiaries (Shay & Tracey, 1997:31). MNEs emphasise technical competence and managerial skills in the selection process as these can be evaluated by assessing past performance. However, past domestic performance is not an indication of a candidate s future performance overseas (Dowling & Welch in Huynh et al., 2007:11; Shay & Tracey, 1997:31) Tungli and Peiperl (2009:162) provide evidence that enterprises tend to leave the decision up to the expatriate and rarely evaluate their partners, or select expatriates through personal recommendations. Despite the fact that many enterprises recognise the impact families have on expatriate success, the potential of the spouse to adjust is generally excluded from the selection process (Andreason, 2008:387; Mendenhall et al., 1987:333). Attrition, maladjustment and poor performance rates have been found to be high among expatriates, which may indicate that MNEs frequently overlook key criteria in the selection process that are essential to the prediction of an expatriate s success (Briscoe et al., 2009:179; Mendenhall et al., 1987:334). The studies discussed below propose similar selection criteria and personality characteristics that should be included in selection processes, as they determine an expatriate s ability to effectively perform tasks within a different cultural environment (Andreason, 2008:384; Arthur & Bennett, 1995; Caligiuri, 2000a; Caligiuri, Tarique & Jacobs, 2009:253; Guthrie, Ash & Stevens, 2003:232; Huang et al., 2011:2402; Holopainen & Björkman, 2005:40; Mendenhall & Oddou, 1985:40; Templer, 2010:1755; Tung, 1981:69; Yeaton & Hall, 2008:76) Tung s Study According to the study carried out by Tung (1981:69), the following four areas contribute to success or failure during international assignments and hence should be used to guide expatriate selection processes. Technical Competence on the Job According to Tung (1981:69), technical competence remains a primary determinant of success, as expatriates are located away from head office, limiting their ability to consult colleagues and superiors on work-related matters. Anderson (2005: ), Avril and Magnini (2007:53), Tung (1981:69), and Wang et al. (2011:72) discuss the importance of technical competence as a selection criterion for international assignments. Job knowledge is 48

66 essential for adjustment and success, because the expatriate s primary role is to transfer information between the parent company and its subsidiaries, while positioned far from the multinational s headquarters. Downes, Varner and Hemmasi (2010:236), Templer (2010:1764), and Wang et al. (2011:73) support the multinational practice of using technical competence as a primary selection criterion, as expatriates who possess job knowledge are more likely to adapt to their work environment and perform successfully. Harris and Brewster (1999:489) point out, however, that though technical competence may be important for those expatriates assigned to technical positions, international assignments usually require managerial-level expatriates, rendering the technical competence criterion less important in selection processes. Andreason (2008:383), Dowling and Welch (quoted by Huynh et al., 2007:11), and Shay and Tracey (1997:31) mention that technical ability can have either a facilitating or inhibiting effect on adjustment and should therefore be considered during selection. The ability to accomplish one s task is an important part of expatriate adjustment and will usually prevent immediate failure on the job, but will not ensure long-term success (Andreason, 2008:383; Harzing, 2004:270; Mendenhall & Oddou, 1985:41; Tung 1981:69). In his study, Templer (2010:1764) found that although job knowledge is an important predictor of expatriate success, it is an insufficient selection criterion; when selection decisions are based solely on job knowledge and technical skills, enterprises risk failure, de-motivation, and underperformance by the expatriate manager and any teams he or she may lead. Personal Traits or Relational Abilities Tung (1981:69) and Hays (1974:31) refer to this as the ability of an expatriate to deal effectively with his or her co-workers, business associates and clients. The crucial element is the ability to live and work with people whose value systems, beliefs, customs, manners and ways of conducting business may greatly differ from one s own (Tung, 1981:69). Tung (1981:75) found that only five percent of multinational enterprises assess candidates relational ability during the expatriate selection decision, even though a lack of relational skills has been found to be a common cause of expatriate failure. Templer (2010:1760) and Tungli and Peiperl (2009:162) found that enterprises are most effective in selecting expatriates based on their technical ability, but less effective with regard to personality traits such as a candidate s relational ability, as they do not often use such criteria in their selection processes. 49

67 Interpersonal skills enhance expatriates ability to fulfil their role in transferring information between headquarters and the host subsidiary. In order to ensure successful adjustment overseas, candidates relational skills should be assessed during the expatriate selection process through interviews, reference checking, work history and evaluations by the candidate s peers, subordinates, superiors, professional psychologists or psychiatrists (Anderson, 2005:577; Koteswari & Bhattacharya, 2007:94; Tung, 1981:69; Wang et al., 2011:73; Yeaton & Hall, 2008:76; Mendenhall & Oddou, 1985:44). Ability to Cope with Environmental Variables Individuals from different countries and cultures often have difficulty in understanding a different culture s values, customs and behaviours. Adjustment problems are experienced when political, legal and economic structures in the host country are different from the systems with which the expatriate is familiar (Haile et al., 2007:100; Hill, 2011:42; Tung, 1981:69). According to Downes et al. (2010:238), Mendenhall and Oddou (1985:41), and Strubler, Park and Agarwal (2011:108), expatriates should possess the ability to understand and accept foreign cultures and customs. Graf (2004:679), Hays (1974:33), and Holopainen and Björkman (2005:41) emphasise the importance of the expatriate s linguistic ability. An expatriate s willingness to use the host culture s language aids in relationship development, cultural understanding and overall adjustment to the foreign country (Mendenhall & Oddou, 1985:42; Muenjohn, 2009:260). A lack of language fluency remains a major barrier to expatriate adjustment, yet many MNEs continue to disregard its importance during selection (Andreason, 2008:385). Expatriates are required to adjust to diverse cultural factors and different working conditions in the host environment, in order to meet performance objectives and complete their assignment. Candidates cross-cultural adaptability should then be evaluated during expatriate selection processes through the Cultural Intelligence model to enable successful adjustment to the host country (Huang et al., 2011:2402; Lee, Veasna & Sukoco, 2013:3; Moulik & Mazumdar, 2012:62; Tung, 1982:67; Wichern, 2008:9). Cultural Intelligence (CQ) is the ability of individuals to understand and make the necessary behavioural adjustments to enable them to perform effectively in culturally diverse situation. Expatriates with a high level of CQ are able to easily understand unfamiliar host cultures. CQ consists of four factors, namely metacognitive CQ, which refers to an individual s ability to understand the unfamiliar environment; cognitive CQ, which refers to the specific knowledge individuals are able to 50

68 gain and understand about a foreign culture based on cues provided; motivational CQ, relating to an individual s self-determination to solve problems in various cross-cultural situations; and finally, behavioural CQ, which indicates an individual s sensitivity and flexibility to adjusting to an unfamiliar setting and acting accordingly. The cognitive, motivational and behavioural factors are the most significant when predicting cross-cultural adjustment and expatriation success during the selection process. (Lee, Veasna & Sukoco, 2013:2-3). Family Situation When expatriates are sent on an international assignment, they, and often their family, are removed from the comfortable and supportive environment of their home country and assigned to an unfamiliar country without their friends, extended families and respective communities. Although the expatriate has an established and supportive host work environment, the spouse is faced with an unstructured environment, and becomes more immersed in the local culture. For this reason an expatriate s family is the main cause of difficulties experienced during the assignment, and family members, particularly the spouse, have a major influence on expatriate performance during the assignment and can be the reason for premature return (Andreason, 2008:386; Gupta et al., 2012a:3559; Haslberger & Brewster, 2008:335; Mäkelä, Känsälä & Suutari, 2011:187; Schoepp & Forstenlechner, 2010:310). A survey in 2005 by GMAC and NFTC (quoted by Brown, 2008:1019) found that 47 percent of candidates for an international assignment withdrew their applications during the selection process due to family concerns, while PWC (quoted by Brown, 2008:1019) found that dual-career issues was the reason why 59 percent of candidates refused an international assignment. Mäkelä, Känsälä and Suutari (2011:185) and McNulty (2010:418) mention that family and personal circumstances as well as partner s career are the most common reasons for expatriates refusing international assignments. The inability or unwillingness of the spouse or family to adjust to the new environment is the most common reason for expatriate failure (Andreason, 2008:382; Hays, 1971:45; Hays, 1974:31; Hill, 2011:611; Shen, 2005:658; Tung, 1981:69). Studies by Caligiuri et al. (2009:257), Mäkelä, Känsälä and Suutari (2011:185), Miser (2010:3-4), Tung (1982:70) and Takeuchi et al. (2005:928) stress the importance of including an assessment of the family s 51

69 flexibility, readiness, cohesion, adaptability and communication characteristics in an enterprise s expatriate selection processes Caligiuri s Big Five Personality Characteristics Caligiuri (2000b:71) identifies the Big Five personality factors of successful expatriates as extroversion (ability to learn hierarchies in society), agreeableness (willingness to cooperate), conscientiousness (capacity for reliable work and commitment), emotional stability (ability to handle stress) and openness (propensity for innovation). An expatriate who possesses all of these traits has the ability to be promoted, to attain a higher status, and to form vital relationships with colleagues and host nationals within the enterprise. These traits should then be included in expatriate selection processes; however, Caligiuri (2000b:84) is of the opinion that the Big Five are more effective in self-selection methods (Mol, Born, Willemsen & Van der Molen, 2005:594). Extroversion International assignments are highly interactive in nature and thus require personality traits that allow expatriates to network with host nationals. Extroversion facilitates interactions and aids expatriates in forming social alliances with host nationals and colleagues (Caligiuri, 2000b:73; Cascio, 2006:643; Mendenhall & Oddou, 1985:42). Extroverts are extremely sociable, assertive, active, energetic, excitement-seeking and talkative (Tews, Stafford & Zhu, 2009:93; Wang et al., 2011:73; Wichern, 2008:4). Wang et al. (2011:73) and Yeaton and Hall (2008:76) are of the opinion that relational skills, such as extroversion and agreeableness, and communication skills enable expatriates to develop relationships with locals as well as colleagues, enhancing an expatriate s ability to transfer relevant information to host-country nationals. Through these relationships, expatriates may gain knowledge regarding the host culture that may enable them to understand local attitudes and act appropriately, which will aid in their adjustment to the new culture (Downes et al., 2010:238; Mendenhall & Oddou, 1985:41; Strubler et al., 2011:108). Expatriates who are outgoing, relaxed and cooperative with individuals from a different culture are able to adapt more successfully to the host environment, while those who are inflexible, shy or arrogant struggle to become accustomed to the foreign culture (Anderson, 2005: ). Templer (2010:1764) therefore found relational skills to be the most 52

70 important personality characteristic for international assignments, and the only trait that aids in work adjustment, expatriate commitment to the assignment, and job satisfaction. Agreeableness Caligiuri (2000b:73) and Tung (1981:69) state that agreeable expatriates who form and strengthen social relationships are able to deal with conflict, are less competitive, and strive for mutual understanding. Agreeable individuals are collaborative in their relationships, patient, sincere, respectful and empathetic. Agreeable expatriates like interacting with others and tend to establish trusting and honest relationships with their colleagues (Koteswari & Bhattacharya, 2007:94; Rose, Ramalu, Uli & Kumar, 2010:105; Tews et al., 2009:93; Wang et al., 2011:73; Wichern, 2008:4). With regard to international assignments, where expatriates come into contact with host nationals on a daily basis, Tung (1981:69) and Wang et al. (2011:73) define agreeableness as one s ability to relate to, live and work with individuals whose values, beliefs, customs, and business manners may differ significantly from one s own and those of the home country. Extroversion and agreeableness are extremely relevant and important for international assignments, as these traits enable expatriates to develop trusting relationships with host nationals. This enhances their ability to effectively transfer enterprise information and advantages, to acquire foreign market knowledge and to maintain control over subsidiaries Candidates relational skills should therefore be assessed during the expatriate selection process to ensure successful adjustment overseas (Colakoglu et al., 2009:1291; Downes et al., 2010:236; Koteswari & Bhattacharya, 2007:94; Tung, 1981:69; Wang et al., 2011:73; Yeaton & Hall, 2008:76). Conscientiousness Expatriates perceived to be conscientious are trusted in the organisation, are more likely to be promoted and are known to show greater commitment to their tasks, thereby reducing the chance of failure in their assignment (Caligiuri, 2000b: 74). International assignments require a great deal of persistence, thoroughness and responsibility, all of which conscientious people possess and make use of (Cascio, 2006:643). 53

71 54 Emma-Louise Webber Conscientious individuals are efficient, punctual, well-organised, systematic, and are known to conform to rules and standards. Expatriates with a high degree of conscientiousness are hard-working, sensible, responsible, dependable and trustworthy, and are therefore more likely to complete their assignments while producing a high standard of work (Hogan & Holland, 2003:102; Liang, 2008:[39]; Ones & Viswesvaran, 1999:281; Tews et al., 2009:93). To reduce expatriate failure (underperformance or premature return), expatriates should be reliable, produce results and have a long-term commitment to the success of the assignment (Rose et al., 2010:105). Conscientiousness as a personality trait has proven to be extremely valuable for international assignments, although in some cases (with extreme perfectionists) it may limit one s ability to carry out tasks in a timely manner (Downes et al., 2010:245; Hogan & Holland, 2003:102; Huang et al., 2005:1660). Lam and Yeung (2008:692), Colakoglu et al., (2009:1291) and Riusala and Suutari (2004:745) discuss the fact that expatriates often serve as a link between headquarters and foreign subsidiaries, to maintain corporate control over these subsidiaries and to ensure the effective transfer of corporate advantages to foreign subsidiaries. Conscientiousness as a trait enables expatriates to both effectively transfer their knowledge to, and control foreign subsidiaries. Their results- and task-orientation enables them to proficiently carry out tasks and to deliver high-quality and timely results. Rose et al. (2010:108) found that the more conscientious attributes expatriates possess, the higher their level of performance will be while overseas. Task-oriented expatriates are also more likely to adapt to their host work environment and to complete their assignment than those who are not (Caligiuri et al., 2009:253; Liang, 2008:[15]; Mol, 2007:53; Mol et al., 2005:608; Ones, Dilchert, Viswesvaran & Judge, 2007:1006; Tews et al., 2009:93). Similar results were found in an earlier study by Ones and Viswesvaran (1999:288) that involved home-country managers assessing the effect that personality traits had on expatriate adjustment, completion of the assignment, development of interpersonal relationships and job performance. Conscientiousness was found to be the most important personality trait for all four areas of the assessment. Caligiuri et al. (2009:253), Huang et al. (2005:1661), and Rose et al. (2010:105) point out that expatriates who are high in conscientiousness are known to consistently work hard, plan well and conduct tasks in an orderly manner. They respect social rules and norms and are

72 trustworthy, which aids in relationship development, work adjustment and successful task completion. Conscientiousness has been found to reduce expatriate failure in the form of underperformance or premature return (Caligiuri et al., 2009:253; Liang, 2008:[15]; Mol, 2007:53; Rose et al., 2010:108). Emotional Stability Caligiuri (2000b:74) and Mendenhall and Oddou (1985:41) agree that emotionally stable individuals are more likely to be able to deal with the inevitable stress associated with unfamiliar living and working conditions (Tye & Chen, 2005:17). Emotional stability is the ability to remain calm and to perform confidently and effectively in stressful situations (Caligiuri et al., 2009:253; Tews et al., 2009:93; Van Woerkom & De Reuver, 2009:2017). International assignments are generally a source of stress for expatriates and their spouses, as they are required to adapt to the culture of the foreign country and interact with locals on a daily basis (Caligiuri et al., 2009:253; Mendenhall & Oddou, 1985:41). Job-related and personal stress is a major cause of expatriate failure, and the ability to deal effectively with this stress is related to expatriate adjustment. Emotional stability is therefore an important characteristic for expatriates, to enable them to successfully complete their job tasks, as well as the overall assignment (Koteswari & Bhattacharya, 2007:89; Mendenhall & Oddou, 1985:41; Rose et al., 2010:106; Shin, Morgeson & Campion, 2007:66; Strubler et al., 2011:108). Downes et al. (2010:238) and Shaffer et al. (2006:120) found emotional stability to have a predominant effect on an expatriate s withdrawal cognitions, with emotional stability being negatively related to an expatriate s willingness to terminate the assignment. Downes et al. (2010:245), Mol et al. (2005:608), Ones et al. (2007:1006), and Tews et al. (2009:93) state that emotional stability is a significant predictor of expatriate adjustment, the development of interpersonal relationships with host nationals and job performance in the work environment. Brown (2008:1020), Rose et al. (2010:106), Shaffer et al. (2006:117), and Tye and Chen (2005:17) mention that emotionally stable expatriates also tend to adjust well to their new environment and experience fewer negative events during the assignment, reducing the chance of expatriate failure. The emotional stability of the candidate and their spouse should be assessed during expatriate selection, as emotional stability has an influence on how well the couple will absorb the stress 55

73 and remain calm during relocation (Gupta et al., 2012a:3563; Shaffer et al., 2006:112; Yeaton & Hall, 2008:76). Openness or Intellect According to Cascio (2006:643), openness is the extent to which an individual is creative, curious and has broad interests. Caligiuri (2000b:74) states that many studies have shown the importance of an expatriate s ability to be accepting of, and to accurately perceive and imitate, the host culture s norms. Open-mindedness involves having an open attitude, without prejudices towards the host culture s behaviour and practices. Expatriates who are open to new experiences are more imaginative, unconventional and creative, which assists them in adjusting to and operating within a foreign environment. Individuals who display this trait tend to be original, curious, open-minded, non-judgemental, eccentric and independent. They show an interest in learning new things and are more likely to identify new opportunities and use creative ways to accomplish enterprise-wide goals, which is one of the many strategic roles of expatriates (Huang et al., 2005: ; Martin, 2010:236; Ramalu, Rose, Kumar & Uli, 2010:113; Shaffer, Harrison, Gregersen, Black & Ferzandi, 2006:113; Van Woerkom & De Reuver, 2009:2016; Yeaton & Hall, 2008:76). Expatriates who are caring and considerate of their fellow employees and who avoid being judgemental or ethnocentric are able to develop trusting relationships and transfer knowledge to host-country nationals more easily (a strategic role of expatriates). A non-judgemental approach leads to clearer information transmission and stronger interpersonal relationships between the expatriate and host nationals (Wang et al., 2011:73; Yeaton & Hall, 2008:76). Expatriates are required to adjust to diverse cultural factors and different working conditions in the host environment, in order to meet performance objectives and complete their assignment. An expatriate s inability to adjust is one of the key causes of expatriate failure. Candidates cross-cultural competencies should then be evaluated during the expatriate selection process to enable successful adaptation to the host country (Huang et al., 2011:2402; Moulik & Mazumdar, 2012:62; Tung, 1982:67; Wichern, 2008:9). 56

74 Mendenhall and Oddou s Dimensions According to Mendenhall et al. (1987:333) and Mendenhall and Oddou (1985:40), there are four dimensions that should be used in the selection process to screen potential candidates and their family members. These dimensions, which Hill (2011:611) also acknowledges predict success, are: The Self-Oriented Dimension Here Mendenhall and Oddou (1985:40) include activities and attributes that strengthen the expatriate s self-esteem, self-confidence and mental hygiene. These activities include reinforcement substitution (whereby the expatriates replace activities from home that brought them pleasure with similar activities in the host culture), stress reduction, and confidence in their ability to accomplish the purpose of their assignment. Harzing (2004:270) mentions that technical capability will usually prevent immediate failure on the job but will not ensure long-term success. The ability to accomplish one s task is an important part of expatriate adjustment, and has a significant effect on one s self-esteem and confidence (Andreason 2008:383; Hays, 1971:46; Mendenhall & Oddou, 1985:41; Tung, 1981:69). Anderson (2005:577) suggests that technical ability be evaluated through supervisor reports, interviews, employment history, references and qualifications. The self-oriented dimension encompasses a tolerance for stress that results from the uncertainty and anxiety associated with an unfamiliar host environment. An expatriate s selforientation either aids or inhibits the successful completion of job tasks, as well as the overall assignment (Mendenhall & Oddou, 1985:41; Rose et al., 2010:106; Shin et al., 2007:66; Strubler et al., 2011:108). Tye and Chen (2005:17) agree that an expatriate s stress tolerance should be assessed in the selection process, as international assignments affect one s social and professional life (Holopainen & Björkman, 2005:40). Stress negatively impacts on an individual s health; Mendenhall and Oddou (1985:44) therefore suggest using psychological tests to identify suitable candidates and stress reduction programmes to prepare them for the international assignment. 57

75 The Others-Oriented Dimension Lin, Lu and Lin (2012:[191]) state that expatriates have a responsibility to their enterprise to excel in international subsidiaries, establish public relations in the host country and share the headquarters values and work culture with host nationals. Expatriate assignments are highly interactive in nature and thus require personality traits that allow expatriates to network with host nationals. Expatriates are often sent on assignment to serve as a link between headquarters and foreign subsidiaries. Their role is to effectively transfer enterprise information and advantages, to acquire foreign market knowledge and to maintain control over subsidiaries (Benson, Perez-Nordtvedt & Datta, 2009:861; Colakoglu et al., 2009:1291; Downes et al., 2010:236; Lam & Yeung, 2008:692; Riusala & Suutari, 2004:745). Mendenhall and Oddou (1985:41-42) point out that interpersonal relationships developed with host-country nationals tend to improve the expatriate s experience, as they may provide support and help expatriates to enact appropriate behaviours. A willingness to communicate will aid in understanding the local culture and creating and fostering relationships. The others-oriented dimension entails developing and fostering long-term relationships with host-country nationals. When measuring this dimension, Mendenhall and Oddou (1985:44) suggest using in-depth evaluations from the potential expatriate s peers, superiors, subordinates and friends. A professional psychologist s or psychiatrist s evaluations, as well as reference checks, interviews and a candidate s work history and performance, may also prove useful in the expatriate selection process (Anderson, 2005:577; Mendenhall & Oddou, 1985:44). The Perceptual Dimension This perceptual dimension is the ability to understand and accept foreign cultures and customs. Individuals from different countries and cultures often have difficulty in understanding a different culture s values, customs and behaviours. Mendenhall and Oddou (1985:42) refer to this dimension as the ability to understand why foreigners behave the way they do. Graf (2004:673) and Mendenhall et al. (1987:333) stress the importance of being non-judgemental, empathetic and open-minded towards foreign nationals. Koteswari and Bhattacharya (2007:94), Lazarova et al. (2010:104), Rose et al. (2010:105), and Tews et al. (2009:93) are of the opinion that once expatriates have adjusted to the foreign environment, they have overcome the stress, anxiety and helplessness that is usually 58

76 associated with international assignments. In order for this adjustment process to take place successfully, expatriates need to be open-minded, flexible towards the host culture, and accepting of the different culture s customs during the assignment. Martin (2010:234), Ramalu et al. (2010:113), Shaffer et al. (2006:113), and Van Woerkom and De Reuver (2009:2017) state that cross-cultural competencies therefore consist of, but are not limited to, cultural empathy, flexibility and open-mindedness. Cultural empathy is the ability to identify with the feelings, thoughts and behaviour of members of the host culture. Flexibility is one s ability to modify one s behaviour to adjust to the new culture and to enable the development of relationships with host-country nationals. Open-mindedness involves having an open attitude without prejudices towards the host culture s behaviour and practices. Mendenhall and Oddou (1985:44) suggest that an expatriate s potential for successful acculturation be assessed and measured through psychological tests (for example: the cognitive rigidity test, the F-test and the Allport-Vernon Study of Values). The Cultural Toughness Dimension Individuals from different countries and cultures often have difficulty in understanding a different culture s values, customs and behaviour. Cross-cultural challenges often arise in the workplace when an expatriate is assigned to a foreign country, resulting in cultural clashes between expatriates and host-country nationals (Haile et al., 2007:101; Tahir & Ismail, 2007:75). The cultural toughness dimension encompasses being able to adapt to and thrive in various different cultural environments. Hill (2011:42, 88) discusses the differences between countries regarding their political, legal and economic systems, as well as the profound differences in cultures. Cultural adaptability has been found to be as important as technical competence for the success of an international assignment, as expatriates are required to adjust to their host environment while delivering superior results in the workplace. Expatriates are required to adjust to the various cultural factors present in the foreign environment, to the interactions with host nationals, as well as to different working conditions that may exist (Huang et al., 2011:2402; Lazarova et al., 2010:95; Wichern, 2008:9). 59

77 Mendenhall and Oddou (1985:43) mention that the particular country of assignment may affect how well the expatriate adjusts, as some cultures are more difficult to adapt to than others, rendering it necessary to assess the cultural toughness of potential expatriates during the selection process (Harvey & Novicevic, 2001:78). Mendenhall and Oddou (1985:44) suggest gathering data on the host country s political, legal, socioeconomic and cultural systems and comparing them with the expatriate s current home systems Dowling and Welch s Criteria for Selection Dowling and Welch (quoted by Huynh et al., 2007:11) have identified six criteria that managers should use in the selection process. They are summarised in the diagram below and are consistent with those of Tung (1981:69), Mendenhall et al. (1987:333) and Mendenhall and Oddou (1985:40). Technical ability, cross-cultural suitability and family requirements are based on the individual, while language, country or cultural requirements and MNE requirements are said to be dependent on the foreign country and culture (Dowling & Welch in Huynh et al., 2007:12). Figure 2.2 Factors in Expatriate Selection Source: Dowling and Welch in Huynh et al. (2007:11) 60

78 Expatriate Selection Procedures Anderson (2005:569) and Mendenhall et al. (1987:332) mention that every multinational that sends expatriates on international assignments conducts a selection process; however, some are more effective than others in designing appropriate expatriate selection procedures, with many enterprises selecting expatriates in the same way as they select managers for domestic positions. However, the expatriate selection decision is dependent on a variety of factors which should be considered during the selection process. These factors include the type and level of position, the extent of contact the expatriate will have with locals and the host government, as well as the degree to which the foreign environment differs from that of the home country. Enterprises should also assess the magnitude of differences between the political, legal, socioeconomic and cultural systems of the host country and those of the home country (Ando et al., 2007:115; Briscoe et al., 2009:165; Mendenhall & Oddou, 1985:44; Snell & Bohlander, 2010:669; Tung, 1981:69). According to Caligiuri et al. (2009:259), the HR department is also often not included in the expatriate selection decision, even though this department is in the best position to assess candidates suitability. High expatriate failure rates indicate that MNEs frequently overlook key criteria in the selection process that are essential to the prediction of an expatriate s success (Briscoe et al., 2009:179; Mendenhall et al., 1987:334). Screening expatriate managers on the personality characteristics discussed above is uncommon, with most multinationals focusing on the expatriate s technical competence and willingness to relocate (Anderson, 2005:579; Cheng & Lin, 2009:62; Hays, 1971:46; Mendenhall et al., 1987:333; Mendenhall & Oddou, 1985:39). Lansing and Boonman (2011:4) mention that selection processes in US MNEs rely heavily on structured interviews, references and self-nomination. Essential factors such as cultural awareness, behavioural assessments, and psychological and cognitive tests are often not regarded as important during the selection decision. Harris (2002:192) and Harris and Brewster (1999: ) identify four variations of expatriate selection systems: open, closed, formal and informal systems. Open and closed systems relate to the nature of selection procedures, while the second two variations relate to the existence of formal and informal systems operating at the enterprise level. Characteristics of these variations are displayed in the table below. 61

79 Table 2.1 Typology of Expatriate Selection Systems Open Formal Clearly defined criteria Clearly defined measures Training for selectors Open advertising of vacancy (internal/external) Panel discussions Informal Less defined criteria Less defined measures Limited training for selectors No panel discussions Open advertising of vacancy Recommendations Clearly defined criteria Clearly defined measures Training for selectors Closed Panel discussions Nominations only (networking/reputation) Source: Harris and Brewster (1999:493). Selectors individual preferences determine criteria and measures No panel discussions Nominations only (networking/reputation) When an open system is in place, the MNE advertises all vacancies, and anyone with the appropriate qualifications and experience may apply for the positions open at that time. The enterprise s selectors conduct interviews, and selection decisions are made under consensus by the panel. A closed system is in place when individual selectors at the headquarters choose or nominate candidates (possibly from within their networks) for positions. The candidate is only informed once the selection decision has been finalised, and the standard interview is replaced by a negotiation about the terms and conditions of the contract (Harris, 2002:192; Harris & Brewster, 1999:493; Linehan & Scullion, 2001:222; Van den Brink, Brouns & Waslander, 2006:526). According to Harris (2002:193) and Harris and Brewster (1999:494), an open formal system makes use of panel interviews and assesses candidates based on predetermined criteria to establish a best fit between the candidate and the enterprise or available position. Psychometric tests are often used in conjunction with evaluations. Although a closed formal system also involves selecting candidates based on criteria, potential candidates are determined by the selectors, allowing personal preferences to influence the decision. In an open informal system, vacancies are openly advertised; however, selection decisions are usually made before an interview even takes place, and are based on personal 62

80 recommendations and the employee s reputation. On the other hand, a closed informal system depicts a situation in which the individual preferences of selectors determine who is acceptable for vacancies in an enterprise, with HR selection criteria often being ignored. This system is characterised by a lack of open debate regarding selection criteria (resulting in discrimination), as well as a lack of accountability, as employees are unaware that the process is taking place (Harris, 2002: ; Harris & Brewster, 1999:494; Linehan & Scullion, 2001:225; Van den Brink et al., 2006:526). According to Caligiuri et al. (2009:356) and Snell and Bohlander (2010:669), the selection of individuals for international assignments should include the following steps: Self-selection Due to the fact that demographic profiles and personal situations of potential candidates will vary, self-selection methods are often the most effective selection process. Employees should assess their career goals and determine whether or not they are interested in working abroad, as well as whether or not they fit with the personality and lifestyle requirements of the particular assignment (Doherty et al., 2011:596; Fenton, 2010:2; Froese, 2011:1107; Snell & Bohlander, 2010:669; Thorn, 2009:443). Caligiuri et al. (2009:252), Cho et al. (2013:1061), and Dickmann et al. (2008:741) suggest that this will avoid the problems of forcing otherwise promising employees into assignments that are a bad fit for them. The expatriates should also be encouraged to assess how their spouse is likely to respond to an assignment and how the spouse feels with regard to relocating. Caligiuri et al. (2009:256) and Hays (1974:25) are of the opinion that those who possess the correct technical specifications and who have a desire to work abroad should be considered during the selection process. This self-selection process then fosters the creation of a pool of suitable candidates, which can be further assessed according to specific criteria relevant to the assignment. Candidate Pool The MNE should build a database of potential candidates who meet the enterprise s needs, and who are capable of performing the tasks and duties for an international assignment from a technical perspective. The candidates included in the database may be those who are selfselected, those evaluated through cognitive ability assessments or job knowledge tests, or 63

81 those recommended by their supervisors or line managers (Anderson, 2005:569; Caligiuri et al., 2009:25; Harris & Brewster, 1999:489; Snell & Bohlander, 2010:669). Caligiuri et al. (2009:256) and Snell and Bohlander (2010:669) state that information in the database should include potential candidates availability, language fluency, host-country preferences and technical skills and abilities, as well as applicable personality criteria. Assessing Candidates Core Abilities and Augmented Skill and Attributes Expatriates who possess job knowledge are more likely to adapt to their work environment and perform successfully while in the host country. MNEs should therefore assess potential candidates skills in terms of technical and managerial readiness relative to the needs of the international assignment. International assignments demand a higher level of maturity, experience, decision-making and team-building skills and qualities, as expatriates are required to fulfil a wider range of activities, roles and responsibilities than those placed in domestic positions (Caligiuri et al., 2009:256; Downes et al., 2010:236; Snell & Bohlander, 2010:669; Templer, 2010:1764; Wang et al., 2011:73). According to Snell and Bohlander (2010:669), in order to be successful, expatriate managers are required to seize strategic opportunities, manage highly decentralised enterprises, have an awareness of global issues, be sensitive to diversity issues, be competent in interpersonal relations and possess community-building skills. This step also includes assessing potential candidates professional and international experience and their negotiation, delegation, and strategic-thinking skills, as well as their cultural sensitivity and ability to adapt to the host country. Harris and Brewster (1999:489) discuss the fact that expatriate assignments differ in complexity from domestic positions, as expatriates are required to deal with various cultural problems created by the international environment. The personality traits and competencies discussed above should then be assessed during this step to ease expatriate adjustment and to maximise the probability of expatriate success (Caligiuri, 2000b:71; Dowling & Welch in Huynh et al., 2007:11; McEvoy & Buller, 2013:216; Mendenhall et al., 1987:333; Mendenhall & Oddou, 1985:40; Snell & Bohlander, 2010:669; Tung, 1981:69). According to Harris and Brewster (1999:492), Hutchings (2002:36), Inkson et al., (1997:354), Lansing and Boonman (2011:4), and Mendenhall and Oddou (1985:44), candidates personality traits should be assessed by the enterprise through psychological tests 64

82 or stress tests and evaluations; opinions from superiors, subordinates, peers and/or licensed psychologists should be obtained. Assessment centres and psychological testing are often used in the expatriate selection process; however, Anderson (2005:578), supported by Ones et al. (2007:1015), points out that answers to these tests can very easily be faked, especially by an employee who has any health-sciences training. Although the above selection process is discussed extensively in expatriate literature, the majority of enterprises do not follow such procedures when selecting candidates for international assignments. A study by Harris and Brewster (1999:497), supported by Hutchings, French and Hatcher (2008:375) and Richardson and Mallon (2005:426) found what they referred to as the coffee-machine system to be the most common form of expatriate selection among multinational enterprises. The coffee machine system describes a situation in the office where a senior line manager is standing by the coffee machine when he or she is joined by a colleague, and the following conversation ensues: How s it going? Oh, you know, overworked and underpaid. Tell me about it. As well as all the usual stuff, Jimmy in Mumbai has just fallen ill and is being flown home. I ve got no idea who we can get over there to pick up the pieces at such short notice. It s driving me crazy. Have you met that Simon on the fifth floor? He s in the same line of work. Very bright and looks like going a long way. He was telling me that he and his wife had a great holiday in Goa a couple of years ago. He seems to like India. Could be worth a chat. Hey, thanks. I ll check him out. No problem. They don t seem able to improve this coffee though, do they? The decision that has, in effect, already taken place, is then legitimised through the enterprise s selection processes, in which interviews become negotiation sessions regarding the terms and conditions of the international position. As a result, the coffee-machine system restricts the pool of potential candidates to technical specialists in specific fields of work, and to those well known to the enterprise s managers, and poses a legal problem with regard to equal-employment opportunity policies (Harris & Brewster, 1999:498). 65

83 2.9. ADJUSTMENT Ali et al. (2003:565), Caligiuri et al. (2009:252), Fenton (2010:42) and Haslberger and Brewster (2008:326) mention that adjustment, adaptation, and acculturation are often used interchangeably throughout expatriate literature to describe the process of change encouraged in expatriates by their move into a foreign environment, their psychological comfort with living and working in a foreign country, or the integration of the expatriates home and host cultures. Many studies (Andreason, 2008:382; Caligiuri et al., 2009:252; Els, 2007:22; Haslberger & Brewster, 2008:325; Hurn, 2007:9; Reiche & Harzing, 2009:29; Tung, 1981:76) have proved that expatriate failure is rarely a result of poor professional or technical competence, but is rather due to expatriates or their spouse s inability to adjust to the host country culture, conditions, and customs. Black and Mendenhall (1991: ), Black, Mendenhall and Oddou (1991:305), Caligiuri (2000:64), and Friedman, Dyke and Murphy (2009:254) argue that expatriate adjustment occurs both prior to and during the international assignment. Anticipatory adjustment, which occurs prior to their arrival in the host country, is dependent upon the enterprise s selection criteria, the expatriate s training, previous international experience, and personal expectations, while adjustment within the country depends on the candidate s skills, job characteristics, the enterprise s culture and the expatriate s family. As a result of these variables, three levels of expatriate cross-cultural adjustment exist; general adjustment, interaction adjustment and work adjustment. General adjustment involves adapting to the host country s living conditions, such as the climate, food and healthcare services. Interaction adjustment is the result of forming relationships with host nationals, while work adjustment entails adapting to new standards, processes and responsibilities in the workplace (Black et al., 1991:304; Caligiuri et al., 2009:255; Friedman et al., 2009:254; Ramalu et al., 2010:115; Shaffer et al., 2006:110; Wichern, 2008:9) Lysgaard s U-Curve Theory Lysgaard (in Black & Mendenhall, 1991:227) initiated the empirical work on the U-Curve theory (UCT) in 1955, while Church (1982:541) further developed this theory to explain how cross-cultural training may aid in the successful adjustment of expatriates on assignment in foreign countries. The UCT describes an expatriate s level of adjustment as a function of time in the host country. According to Church (1982:541), Littrell, Salas, Hess, Paley and Riedel 66

84 (2006:364) and Thomas (in Els, 2007:12), the adjustment of expatriates to the host country environment follows a U-shaped cycle consisting of four consecutive stages. Figure 2.3 The U-Curve of Cross-Cultural Adjustment - Source: Black and Mendenhall (1991:227) 1. Honeymoon According to Church (1982:541), the honeymoon stage, during which the expatriate is optimistic, elated, and fascinated by the new environment, has been known to last for up to six months from the date of arrival. During this stage, the expatriate family find the host country and its customs exciting and are interested in everything that they come across in the new environment (Black & Mendenhall, 1991:226; Littrell et al., 2006:364; Thomas in Els, 2007:12). 67

85 2. Culture Shock Littrell et al. (2006:364) and Thomas (in Els, 2007:12) explain that the expatriate s initial infatuation with the host country is followed by the culture-shock stage, when reality sets in, and the expatriate starts becoming confused and frustrated by the new environment. Culture shock occurs when people are suddenly introduced to a culture that differs significantly from their own, and is characterised by a lack of familiar symbols and signs. Culture shock may also occur over time as expatriates experience more of the nuances of the host culture and have problems adjusting. During international assignments, expatriates and their families usually experience living in and adjusting to a foreign environment with different cultural norms and living standards. As a result the expatriate and their family often become anxious, unhappy, frustrated, homesick, irritated and lonely (Church, 1982:540; Friedman et al., 2009:253; Ghafoor et al., 2011:337; Fenton, 2010:22). During this stage, expatriates interact more frequently with host nationals and often do not know how to behave appropriately and effectively, owing to the differences between the home and host countries. As expatriates and their families struggle to cope with living in the foreign country on a day-to-day basis, they may become hostile towards the host country and begin to associate themselves with others in similar situations within expatriate communities. The level of an expatriate s adjustment therefore has a significant effect on job performance, job satisfaction and premature withdrawal from the assignment, as well as the family s quality of life during the assignment (Black & Mendenhall, 1991:225; Church, 1982:541; Friedman et al., 2009:253; Littrell et al., 2006:364; Thomas in Els, 2007:12). 3. Adjustment During the adjustment stage the expatriate gradually recovers from the initial culture shock, and starts to accept and adapt to the cultural differences. Expatriates learn how to behave appropriately according to the country s cultural norms, how to get things done, and begin to find their rhythm for daily living in the host environment (Black & Mendenhall, 1991:226; Littrell et al., 2006:364; Thomas in Els, 2007:12). Church (1982:226) mentions that this stage is often characterised by increased language knowledge and a more open attitude towards host nationals. 68

86 4. Mastery Black and Mendenhall (1991:226), Church (1982:541), Littrell et al. (2006:364), and Thomas (in Els, 2007:12) state that this stage is reached when the expatriates master the host country conditions and start to function as effectively as if they were at home. Expatriates and their families are no longer anxious, lonely, or irritable and begin to accept and take pleasure in the host country s culture and customs. Adler (in Church, 1982:541) views expatriate adjustment as a transitional experience in which expatriates move from a low to a high state of self- and cultural awareness. The five phases are consistent with Lysgaard s U-curve theory (in Black & Mendenhall, 1991:227). The contact phase occurs when expatriates arrive in the host country and are excited by the new and foreign environment. This is followed by the disintegration phase, in which expatriates become depressed and begin to withdraw, due to the various significant cultural differences. A reintegration phase occurs, which is characterised by a strong rejection of the host culture, and is followed by the autonomy stage, in which expatriates become sensitive to, and begin to understand the host nationals and their culture. The final independence stage occurs when expatriates are able to undergo further life transitions, and is characterised by increased self- and cultural awareness and an appreciation of cultural differences. According to Black and Mendenhall (1991:232) and Friedman et al. (2009:252), the U-curve theory is effective in describing the phases of expatriate adjustment; however, it fails to explain why certain stages emerge, and how and why individuals progress from one stage to the next. Cognitive theories of learning explain how learning occurs through the mental processing of information, and the subsequent determination of behaviour to be executed. On the other hand, behavioural theories explain how learning is determined by behaviour, its resultant consequences and the associations individuals make between the two Bandura s Social Learning Theory Social Learning Theory (SLT), developed by Bandura (1971:3), integrates cognitive and behavioural theories as a means of examining the cross-cultural adjustment process of expatriates and the ideas associated with the UCT. The social learning process comprises four components: attention, retention, reproduction and incentives. Attention occurs when a person observes new behaviours, and the results they produce, from another person. This is followed by retention, where people encode the modelled behaviour as a memory, as they 69

87 70 Emma-Louise Webber recognise that their own behaviour is different from the norm. They then reproduce or imitate the stored behaviour, allowing them to understand and experience the consequences of using the new behaviour. This process results in positive intercultural interactions and reduces the occurrence of misunderstandings and inappropriate behaviour (Bandura, 1971:6; Black & Mendenhall, 1991: ; Caligiuri & Tarique, 2009:338; Chien, 2012:166; Church, 1982:543; Malek, 2011:68). According to SLT, an expatriate s adjustment to the host culture can occur over time as a result of observing (learning) and modelling the behavioural patterns of host nationals (Bandura, 1971:6; Black & Mendenhall, 1991: ; Church, 1982:543). The initial ignorance of differences and focus on similarities between the home and host cultures describes the honeymoon stage. This is followed by a period of culture shock where expatriates recognise the need for learning, and begin to pay attention to, observe and imitate the essential features of host nationals behaviour. The end result is cross-cultural adjustment, whereby expatriates and their families are able to function as effectively as if they were at home PREPARATION AND TRAINING Adequate preparation has been found to be essential to the success of an expatriate assignment, as it aids in an expatriate s adjustment and acculturation, and understanding of the host-country s environment and cultural norms (Cerimagic & Smith, 2011:395; Forster, 1997:422; Hutchings, 2002:32). Ample time should be granted (prior to departure) for an expatriate and the family to prepare for the assignment, as a lack of, or insufficient preparation and relocation assistance has proved to be a primary concern and source of stress for expatriates and their spouses (Brown, 2008:1022; Forster, 1997:427; Shah, 2011:10). A study by Cerimagic and Smith (2011:395) found that the majority of enterprises did not provide expatriates with pre-departure preparation or training, with 76 percent of expatriates not receiving any cross-cultural preparation prior to their departure. Additionally, the 24 percent who received preparation found the orientation process to be vague and not particularly useful. Forster (1997:424) found pre-departure briefings to be helpful on a factual level; however, they did not prepare expatriates for their unexpected psychological reactions to the international assignment and host-country. A survey by CIGNA International (quoted in Brown, 2008:1030) found that 53 percent of enterprises felt they provided sufficient preparation for expatriates and their families, while only 32 percent of expatriates felt that

88 they received adequate preparation and support prior to and during the international assignment. This is despite the fact that relevant and adequate preparation is often considered to be vital to expatriates success, easing their adjustment to the host country (Cerimagic & Smith, 2011:395; Hutchings, 2002:32). According to Cascio (2006:646), Hutchings (2002:45), Littrell et al. (2006:371), and Mendenhall and Oddou (1985:44), initial orientation sessions should consist of comprehensive cultural and assignment briefings, and cover the family s various relocation requirements. Families should be informed of the host country s traditions, history, living conditions, political, economic and cultural environments, as well as applicable health and visa requirements. During these orientation sessions, the length of the assignment, leave conditions, salary and allowances, possible tax consequences, and the enterprise s repatriation policy should be discussed clearly with expatriate candidates. Enterprises should offer relocation, housing, and placement assistance, and provide expatriates and their spouses with comprehensive lists of property agents, appropriate schools, shopping centres and medical clinics, prior to the assignment. Expatriates and their families should also take part in a pre-departure orientation programme that consists of an introductory language course, reinforcement of cultural awareness and openness, and emergency and arrival information. On their arrival in the host country, expatriates should be orientated towards the foreign work environment, their position within the enterprise, and introduced to the host-country workplace and colleagues (Cascio, 2006:646; Cherry, 2010:139; Kim & Tung, 2013:1045; Purgal-Popiela, 2011:39; Vogel et al., 2008:36). Ashamalla (1998:58), Cascio (2006:645), and Sharma (2012:15) recommend that enterprises organise orientation visits to the host country for potential expatriates and their spouses before their final departure. These pre-assignment visits will allow the couple (as well as any children) to familiarise themselves with the local culture and customs, to learn appropriate behaviour, and to set realistic expectations about the assignment and foreign environment. Orientation visits provide expatriates and their spouses with first-hand information regarding the host country and culture, which may reduce uncertainty and aid in the expatriate s adjustment during the assignment (Ashamalla, 1998:58; Black & Gregersen, 1991a:464; Cascio, 2006: ; Ghafoor et al., 2011:338; Rosenbusch & Cseh, 2012:63; Sharma, 2012:15; Sims & Schraeder, 2004:76). In a study by Vögel and Van Vuuren (2008:85), 98 percent of expatriates on assignment for a period under four years, and 80 percent of those on 71

89 72 Emma-Louise Webber assignment for more than four years, agreed that enterprises should organise orientation visits for expatriates and their spouses to the host country prior to their departure. However, according to Harvey and Wiese (1998a:368), Kim and Tung (2013:1042), and Sims and Schraeder (2004:76), pre-departure orientation visits often become tourist visits or holidays, and the expatriate couple return to their home country with an unrealistic perception of the host country s culture and customs. As a result of these misperceptions, the couple experiences a more severe form of culture shock on their arrival in the host country, as they realise that the culture and lifestyle they experienced in their orientation visit differs significantly from reality. Nevertheless, various studies (Ashamalla, 1998:58; Cascio, 2006:645; Cerimagic & Smith, 2011:395; Hutchings, 2002:32; Shah, 2011:10; Sharma, 2012:15) have proved how important comprehensive and relevant orientation sessions can be in preparing expatriates for what to expect and how to communicate and come into contact with the locals. Sufficient preparation has been known to aid in reducing expatriates discomfort in the foreign environment thereby facilitating their adjustment Training As a result of inadequate preparation and training programmes, the expatriate s inability to adjust and the inability of the trailing spouse to adjust are the two most common causes of expatriate failure (Anderson, 2005:568; Briscoe et al., 2009:165; Gomez-Mejia et al., 2010:576; Grobler et al., 2011:642; Tung, 1981:76). According to Eastwood and Renard (2008:1), the emphasis enterprises place on international operations increases the need for effective preparation and training programmes for expatriates being sent on both short- and long-term assignments. Hill (2011:613) and Shen (2005:657) define international training as programmes used to familiarise candidates with the local working environment, and to ensure that they have adequate skills and knowledge necessary for working abroad effectively. According to Cerimagic and Smith (2011:394) and Sharma (2012:12), training is the process of altering an expatriate s attitudes and knowledge in a way that increases the probability of realising individual and enterprise goals. Chien and McLean (2011:860) and Shaffer and Harrison (2001:243) define cultural novelty as commonplace features or everyday customs of a country s culture. Cascio (2006:647), Friedman et al. (2009:253), Ghafoor et al. (2011:337), and Takeuchi et al. (2007:931)

90 mention that a major source of stress for expatriates results from the culture shock brought on by perceived differences in cultural novelty. A lack of relevant international training often results in culture shock, where expatriates become severely homesick and stressed, leading to family conflict and expatriate withdrawal from the assignment. Training programmes should therefore be designed in such a way that they reduce the harshness of the initial culture shock and psychological stress experienced by expatriates on their arrival in the host country. In order for enterprises to cope with increasing global competition, Chien and McLean (2011:858) state that expatriates need to be able to work effectively with people from an array of countries and cultures. Business interactions between employees from different countries and cultural backgrounds often fail due to existing cultural differences and a lack of training regarding these differences. Expatriates often fail to adjust as they struggle to relate to people from different cultural backgrounds and are often monolingual (Gomez-Mejia, 2010:577). For example, Western expatriates have been known to experience serious problems adjusting when on assignment in Asia. Eastwood and Renard (2008:1) mention a study in which 60 percent of expatriates who were sent on assignment without prior training returned prematurely. However three days of predeparture training reduced the failure rate to 5 percent; while six days of training reduced the rate further to a mere 1.5 percent. Despite the fact that expatriate training has proved to be invaluable in reducing high failure rates, studies by Littrell et al. (2006:358), Mansour and Wood (2010:387), Mohr and Klein (2004:1195), and Shen and Darby (2006:353) found that expatriates and their families in general did not receive training before their departure. Many enterprises do not provide expatriates with pre-departure training programmes as they feel that such programmes are too expensive, ineffective and time-consuming (Ghafoor et al., 2011:337; Grobler et al., 2011:645; Mendenhall et al., 1987:334; Shen, 2005:660; Shen & Darby, 2006:353). Shay and Tracey (1997:34) found that 25 percent of expatriates felt they had not received adequate and relevant training for their international assignment, even though every respondent agreed that training was a necessary element in the expatriation process, proved to enhance job satisfaction and work performance. A study by Shah (2011:8) showed that 26 percent of expatriates sent on international assignments received no pre-departure training, 8 percent had irrelevant training, and a third had very little training. Only one-sixth of the expatriates felt that the training they received was relevant and useful toward aiding in their 73

91 adjustment to the foreign country. The majority of these expatriates felt they were faced with performance and adjustment issues due to the lack of relevant training. Similarly, Cerimagic and Smith (2011:396) found that 61.4 percent of expatriates did not receive any form of incountry training. Moreover, 68 percent of expatriates in a study by Tung (1981:76) did not receive training to aid in their adjustment, while only 32 percent of expatriates indicated that their enterprises had formalised training programmes in place. When expatriates are unfamiliar with the host country s customs, cultures and work habits, they are often insensitive and offend host nationals. Training creates an awareness of cultural differences, increases managerial effectiveness, and improves the expatriate s competence as an intercultural communicator. Enterprises therefore need to conduct effective intercultural and language training for expatriates prior to an international assignment, as well as when they arrive in the host environment, to enable them to bridge the gap between the home and host countries (Chien & McLean, 2011:858; Eastwood & Renard, 2008:1-2; Ghafoor et al., 2011:343; Sharma, 2012:12) Cross-Cultural Training The need for cross-cultural training for expatriates and their families prior to their departure is emphasised throughout expatriate literature and can be explained by the U-curve and social learning theories discussed above (Eastwood & Renard, 2008:2; Fischlmayr & Kollinger, 2010:471; Mohr & Klein, 2004:1197; Okpara & Kabongo, 2011:23; Shah, 2011:4; Smart, 2011:64). Expatriates rarely fail due to a lack of technical competence but rather because of personal or family issues brought about by their lack of cross-cultural skills (Andreason, 2008:382; Hurn, 2007:9; Shen, 2005:658; Shay & Tracey, 1997:31) Chien and McLean (2011:861), Ghafoor et al. (2011:337), and Shay and Tracey (1997:35) state that cross-cultural training refers to programmes intended to prepare expatriates for more effective work performance and interpersonal relationships with host-country nationals while on assignment. Cross-cultural training provides a foundation for cultural integration and aids expatriates in understanding and adjusting to the host country s culture and customs. According to Cascio (2006:647), Eastwood and Renard (2008:2), Littrell et al. (2006:356), and Okpara and Kabongo (2011:24), cross-cultural training refers to formal programmes designed to prepare expatriates for interacting with host nationals of a different culture, through the development of cognitive, affective and behavioural competencies. This usually 74

92 75 Emma-Louise Webber entails pre-departure and post-arrival cultural awareness training in the host country s customs, language and communication styles, and daily activities. A study by Cerimagic and Smith (2011:396) found that 76 percent of expatriates did not receive any cross-cultural training either before or during their international assignment. Gomez-Mejia et al. (2010:577) state that only a third of multinationals provide any form of cross-cultural training to expatriates, and those that do usually offer brief, rushed programmes. Gomez-Mejia et al. (2010:583) also mention a study which found that 57 percent of enterprises provided one day of cross-cultural training; 22 percent included the trailing spouse and 32 percent included the expatriate family. Cho et al. (2013:1053), Gupta et al. (2012b:18), Littrell et al. (2006:366), Konopaske and Werner (2005:1161), as well as Sims and Schraeder (2004:76), state that enterprises should prepare and educate expatriates about various religious, cultural, language and lifestyle differences (including local cuisine and shopping habits) between their home country and the country of assignment. In order to ease their adjustment to the foreign environment, expatriates need to gain respect for and understand the local culture, as well as avoid behaviour that is not compatible with the host culture. Chien and McLean (2011:861), Eastwood and Renard (2008:2), Hurn (2007:12), Littrell et al. (2006:371), and Shen (2005:660) state that training programmes should include informal briefings regarding the history, geography and customs of the host country; the country s social, demographic and business trends; the political, legal and economic systems; as well as its national communication styles. More specific training can be provided by host nationals in terms of the host country s customs, taboos, religious practices, social conventions and existing conflicts between local and Western values (Shay & Tracey, 1997:34). A study by Okpara and Kabongo (2011:28) found all forms of cross-cultural training conducted prior to and during an assignment to have a significantly positive effect on expatriate managers adjustment. Before developing a cross-cultural awareness programme, the enterprise should conduct a needs analysis. This allows the enterprise to determine the strengths and weaknesses of the expatriate in relation to the skills required to adapt to the host country. Information regarding assignment objectives, expatriate responsibilities, expectations, international experience, and family requirements should be collected and assessed. Once these are known, the content, structure, programme quality and trainer for such training programmes can then be tailored to

93 suit the expatriate s specific needs (Caligiuri & Tarique, 2006:312; Eastwood & Renard, 2008:2; Hurn, 2007:11; Littrell et al., 2006:366; Okpara & Kabongo, 2011:26). According to Ghafoor et al. (2011:338), Littrell et al. (2006:381), Okpara and Kabongo (2011:24), and Sharma (2012:15), the components of cross-cultural training programmes should be customised according to the cultural toughness of the country, differences or similarities between the home and host countries, the type of job, the degree of interaction, and the purpose and duration of assignment. For example, expatriates going on short-term assignments usually only require factual information and survival-level language training, as they seldom interact with host nationals outside the workplace. On the other hand, longterm assignments require expatriates to learn appropriate behaviour and undergo the more extensive language training required for successful interaction. Shay and Tracey (1997:34) are of the opinion that enterprises should include both objective and subjective characteristics of the host culture in the content of their training programmes. Programmes that concentrate on objective characteristics (currencies, political systems, architecture and languages) equip expatriates with the knowledge and skills required to understand daily cultural differences, allowing them to manage and overcome the initial culture shock and feel more comfortable in the foreign environment. Enterprises that incorporate subjective characteristics (customs, value systems and beliefs) in their training programmes aid expatriates to develop a deeper understanding of the values and beliefs that influence the behaviour of host nationals. Subjective training therefore facilitates expatriates adjustment and enhances their performance in the host country. With regard to the structure of the programme, Shay and Tracey (1997:34) are of the opinion that objective characteristics should be presented before the subjective characteristics. This will allow expatriates to gain a general understanding of the cultural differences between the countries, before they delve into specifics regarding host nationals and their social behaviour. Objective characteristics can be taught through lectures, seminars, readings and educational videos, while the learning of subjective characteristics often requires orientation visits, cultural simulations or role-playing. This is because behavioural skills are acquired through practice, repetition and feedback regarding performance (Caligiuri & Tarique, 2006:312; Hurn, 2007:15; Littrell et al., 2006:371; Okpara & Kabongo, 2011:24; Sharma, 2007:17; Shen, 2005:661). 76

94 Shay and Tracey (1997:35) and Littrell et al. (2006:369) state that qualified trainers who possess the attributes below are in the best position to present such cross-cultural training programmes. Previous international experience Personal experience with the challenges frequently associated with culture shock A comprehensive knowledge of the host country A clear understanding of the differences between the home- and host-country values A positive attitude to experiencing new cultures. Expatriates who are prepared and aware of the host country s culture and customs will have a mental idea of various potential situations that may arise during the assignment. This mindset of being prepared should increase their confidence in the assignment, eliminate uncertainty, and ease their adjustment to the local environment, reducing the chance of premature return (Jenkins & Mockaitis, 2010:2696; Mohr & Klein, 2004:1197; Smart, 2011:90). Littrell et al. (2006:377), Shaffer and Harrison (2001:244), and Shah (2011:4) advise enterprises to provide pre-departure and post-arrival cross-cultural training to expatriates and their families, as the greater the cultural differences between the home and host countries, the more difficult it will be for them to adjust Language Training The issue that concerns MNEs the most with regard to international assignments is the need for expatriates to learn the host language (Briscoe et al., 2009:183). Language training involves encouraging expatriates to appreciate the verbal and non-verbal cues that enable us to understand people from other cultures. Seventy percent of our everyday communication can be considered non-verbal, which is harder for expatriates to grasp and understand. For example, eye contact, personal space, posture, greetings, and hand gestures have different meanings in different cultures. It is therefore important for expatriates to become accustomed to differences between the home and host country s communication methods and body language to avoid misinterpretations and confusion (Ashamalla, 1998:59; Cerimagic & Smith, 2011:396; Gomez-Mejia et al., 2010:582; Hill, 2011:108; Hurn, 2007:12; Rosenbusch & Cseh, 2012:73; Sharma, 2012:16; Tung, 1981:71). Kupka et al. (2008:1783), Mohr and Klein (2004:1194), and Shaffer and Harrison (2001:241) found that expatriates who acquired a basic repertoire in the foreign language had a more 77

95 78 Emma-Louise Webber positive overseas experience, and adjusted more easily than those who made no attempt to learn the language. Basic knowledge in the local language is essential for coping with everyday tasks such as shopping, getting directions, reading mail, or going to the doctor. Knowledge of the host language demonstrates an interest in the local culture as well as a willingness to understand it, whereas a lack thereof often leads to misunderstandings and confusion. Language fluency helps expatriates relate to local customers, monitor competitors, understand cultural nuances, avoid feeling isolated, find social support from, and build social networks with, host nationals, which eases and speeds up their adjustment process in the foreign country (Ashamalla, 1998:59; Briscoe et al., 2009:184; Rosenbusch & Cseh, 2012:73; Sharma, 2012:16). An expatriate s ability to exchange common courtesies will be appreciated by host nationals as a demonstration of interest in the locals and their culture, whereas relying on one s own language (in most cases English) diminishes an expatriate s ability to effectively interact with host nationals. Sole reliance on their home language forces expatriates to become reactive instead of proactive, and reduces the speed with which they can process data written in the foreign language. Expatriate managers also often miss out on crucial pieces of work-related information published in the host language or discussed during informal meetings (Eastwood & Renard, 2008:2; Hill, 2011:614; Hurn, 2001:13; Littrell et al., 2006: ). On the other hand, fluency in the host national s language has been found to improve expatriates managerial effectiveness and negotiating ability and enhance their ability to access information regarding the host country s economic, political and market environments (Briscoe et al., 2009:184; Eastwood & Renard, 2008:2; Hurn, 2007:13; Littrell et al., 2006: ; Sharma, 2012:16). Briscoe et al. (2009:184) mention that only a third of US enterprises provide some form of language training to their expatriates, while almost all Japanese enterprises offer both language and cultural training. Studies by Mansour and Wood (2010:387), Mohr and Klein (2004:1195) and Sharma (2012:16) found that in general expatriates and their spouses did not receive language training before departure, due to the fact that learning a new language is usually a lengthy process. Andreason (2008:388), Hurn (2007:14), Mäkelä, Känsälä and Suutari (2011:190), Mohr and Klein (2004:1195), and Rosenbusch and Cseh (2012:73) recommend that enterprises facilitate a basic language course before the expatriate s departure that covers everyday phrases, greetings and introductions. This should build expatriate confidence and may encourage future wider learning in the host language. If a high

96 79 Emma-Louise Webber degree of fluency in the host language is required, expatriates should receive formal and intensive language training well before their departure date and if necessary, continue with such training during the assignment. Hill (2011:614) and Sharma (2012:16) identify language fluency as a crucial component that affects expatriate performance and effectiveness during an international assignment Practical Training According to Gomez-Mejia et al. (2010:583), the key part of expatriate training occurs on the job and takes place shortly after the family s arrival in the host country. Practical training enables expatriates to experience and learn from interactions with host nationals, and aids expatriates and their families with easing their way into daily life in the foreign environment. This training can be provided on arrival in the foreign environment by a mentor, host national or relevant support network in the host country (Caligiuri & Tarique, 2006:314; Hill, 2011:615). Caligiuri and Tarique (2006:310), Grobler et al. (2011:645) and Tung (1981:71) discuss the importance of field experience for expatriates and their families. This may entail sending the candidate to the host country for an orientation or site visit, or exposing them to microcultures within the home country during short field exercises. Expatriates should undergo some of the emotional stress and culture shock that can be expected while living and working with host nationals in the foreign country. Often a week s live-in experience prior to their departure will be beneficial for their adjustment to the host culture and will increase their ability to appreciate various cultural perspectives. Mentoring by host-country nationals demonstrates enterprise support and may improve both language and cross-cultural skills. Mentors help expatriates with networking, support and advice, build cross-cultural awareness, and aid in the development of competencies for becoming effective in the foreign country (Caligiuri & Tarique, 2006:310; MacDonald & Arthur, 2005:150). Practical training is important, as expatriates have been found to benefit from encounters with people whose cultures differ significantly from their own (Tung, 1981:71) ROLE IN DEVELOPMENT International assignments play an increasingly important role in the execution of international enterprise strategies and the development of expatriates (Briscoe et al., 2009:187; Shen,

97 2005:663; Stahl et al., 2002:216). While training aims to improve an expatriate s current working skills, development aims to increase their abilities in relation to some future managerial position or job (Dowling & Welch in Shen & Darby, 2006:345; Sharma, 2012:12; Shen, 2005:657). Hill (2011: ) and Shen and Darby (2006:349) state that managerial development initiatives have a long-term focus and are intended to develop the expatriate s skills throughout his or her career with the enterprise. According to Shen (2005:659) and Shen and Darby (2006: ), development encompasses identifying, fostering, promoting, and using international managers to enhance an enterprise s competitiveness. Management development programmes play a central role in an enterprise s strategy due to their importance in developing a cross-national corporate culture and integrating international operations. Development can therefore be viewed as a tool to help the enterprise achieve its strategic goals, by enhancing skill sets, reinforcing the corporate culture and facilitating the creation of an informal network for sharing knowledge between subsidiaries. Grobler et al. (2011:645) and Stahl et al. (2002:217) mention that international assignments are an important component in an enterprise s career development programme. Such assignments enable enterprises to develop employee managerial skills and introduce new employees to the corporate culture. When expatriates are sent on international assignments for development reasons, they are generally sent to acquire new technologies, competencies or skills that they will need to perform in some future position within the enterprise (Caligiuri & Tarique, 2006:309). Expatriates are therefore sent on international assignments to develop their cross-cultural sensitivity, managerial skills and to gain international experience. Broad international experience is often thought to enhance knowledge acquisition, human resource development, and the management and leadership skills of executives (Inkson et al., 1997:364; Shen & Darby, 2006:349; Stahl et al., 2002:217). Briscoe et al. (2009:187), Edström and Galbraith (1977:253) and Shen (2005:662) state that international assignments are highly developmental, and that enterprises often expect managers above a certain level to have international experience. International assignments are then a critical component of an individual s career plan, their purpose being to develop employees for future executive responsibility. Mendenhall & Stahl (2000:257), however, emphasise the fact that international assignments are highly expensive and are rarely used as general management 80

98 development tools, but rather limited to a small portion of executives and high potential employees. Expatriates and home-country managers value an international assignment for the opportunity it brings for skill acquisition, personal development and career enhancement. Expatriates motivation to perform well while on assignment has been found to depend on such career advancement opportunities offered by the enterprise on their return. Enterprises should therefore position the assignment as a step towards advancement within the enterprise, and should provide support for the expatriate and the trailing spouse during the assignment to eliminate the possibility of premature return (Gomez-Mejia et al., 2010:584; Inkson et al., 1997:354; Stahl et al., 2002:217) SUPPORT Many authors (Kupka & Cathro, 2007:952; Malek, 2011:57; Takeuchi, 2010:1044) stress that an expatriate s well-being and adjustment during an international assignment is dependent on various stakeholders, including the expatriate s spouse and family, the enterprise, and hostcountry nationals. The expatriate is affected by these stakeholders actions and vice versa, and relies on them for the support needed during an assignment. Cho et al. (2013:1052) point out that international assignments, which require expatriates and often their accompanying spouses and families to relocate to the host country, increase their uncertainty and stress levels. Recent trends indicate that the number of dual-income and dualcareer couples sent on international assignments is growing significantly (Harvey, 1995:224; Konopaske et al., 2005:408, Mäkelä, Känsälä & Suutari, 2011:188). Enterprise support for these families before, during, and after an assignment is necessary to help minimise their uncertainty and stress. Dual-career couples are often faced with many issues and problems when an expatriate manager accepts an international assignment. These problems often arise when the trailing spouse seeks employment in the host country. Spouses are often unable to find suitable or satisfying work that matches the family s income requirements, or are ineligible to work in some host countries with conservative cultures (Cho et al., 2013:1053; Harvey, 1995:226; Konopaske et al., 2005:407; Lauring & Selmer, 2010:61; Malek, 2011:200; Shaffer et al., 2012:1295). If the trailing spouse struggles to find employment, the anticipated loss of additional income and career development may reduce the expatriate family s living 81

99 82 Emma-Louise Webber standards, and lead to disagreements within the family. As a result, spouses often have a negative effect on an expatriate s adjustment. Enterprises should provide support for expatriate spouses in the form of work permits, positions within the foreign subsidiary, formal recommendations, or further education expenses (Cole, 2013:313; Mäkelä, Känsälä & Suutari, 2011:188; Wilson, 2011:67). Forster (1997:427) states that MNEs fail to provide adequate support for expatriates and their spouses while on assignment, which reduces the probability of such families accepting international assignments in the future. Spousal support is critical to successful international assignments and has been found to have a positive effect on expatriate work and general adjustment (Lee, Veasna & Wu, 2013:380). Although many studies have found that trailing spouses can provide expatriates with helpful information and assistance, aiding them during the stressful relocation period, Kraimer, Wayne and Jaworski (2001:92) found that spousal support had no effect on expatriate adjustment. Kraimer et al. (2001:73), Lee, Veasna and Wu (2013:380), Stroppa & Spieβ (2010:2307), and Takeuchi (2010:1045) point out that expatriates may receive social support from their enterprise, colleagues, supervisors, and their friends and families, which often reduces the psychological distress commonly experienced in multi-cultural situations. Enterprises generally provide support (mentors, social clubs, expatriate communities, regular vacation, and spousal employment) during the assignment that has a significant effect on the expatriate s work and quality of life in the foreign environment. Expatriates require assistance, which may include financial assistance, support in the form of schooling and housing, and general assistance in the form of mentoring and counselling. Enterprise support may be in the form of informational support, which helps expatriates understand cultural differences and work norms, reducing work stress; cooperation support, which facilitates work adjustment; instrumental support, which helps expatriates find schools and housing in the foreign country; and emotional support, which facilitates interaction adjustment and provides expatriates with a sense of belonging and acceptance (Bhatti, Battour & Ismail, 2013:702; Kraimer et al., 2001:94; Mahajan & De Silva, 2012:353). Mentor programmes and expatriate communities have been found to have a positive effect on an expatriate s adjustment during an assignment. Home- and host-country mentoring is a valuable tool for transferring enterprise values and norms and enhancing an expatriate s work performance. Expatriate communities have been proved to be a valuable source of support

100 and information which helps the expatriate family adapt to their foreign surroundings (Fee, McGrath-Champ & Yang, 2011:378; Stroppa & Spieβ, 2010:2308; Tung, 1982:71). According to Cole (2012:313), Fischlmayr and Kollinger (2010:472), Long (2010:178), Wilkinson and Singh (2010:178), and Wilson (2011:17-18), social support has a significant effect on psychological well-being and personal growth, reducing uncertainty and allowing expatriates and their spouses to get advice from host nationals, form friendships, and share experiences with like-minded people. Bhatti et al. (2013:701) and Mahajan and De Silva (2012:350) define a social network as relationships between expatriates and host nationals or friends. These networks usually replace family networks formerly present in the home country, and provide expatriates with information about the job as well as the local customs and lifestyle differences, enabling them to adjust to the foreign culture and work environment more easily. Studies by Bhatti et al. (2013:709), Kraimer et al. (2001:93), Mahajan and De Silva (2012:354), and Stroppa and Spieβ (2010:2318) found that social networks had a positive influence on expatriate adjustment and job performance. These networks helped expatriates gain information regarding the culture, language and behaviour of host-country nationals, which facilitated their interaction and general adjustment. Expatriates who are well-adjusted at home and at work, and who are comfortable interacting with host nationals tend to perform better in the workplace. Expatriates who experience stress due to difficulties in adjusting to daily activities in the environment may bring that stress with them to work, lowering their work adjustment and job performance levels. Social support is therefore a buffer against stress experienced at work; it improves expatriates attitudes and adjustment as well as their job performance (Kraimer et al., 2001:79; Lee et al., 2013:381; Mahajan & De Silva, 2012:358; Stroppa & Spieβ, 2010:2306) COMPENSATION According to Bonache (2006:158), Bonache and Fernández (1997:457), Gomez-Mejia et al. (2010:585), and Grobler et al. (2011:647), one of the most complex issues in IHRM and the aspect of expatriate management that receives the least amount of attention is the design and maintenance of an appropriate compensation and benefits plan for expatriates while on assignment. Bonache et al. (2006:2136), Chaudhry, Kalyar, Sabir and Ahmad (2012:54), and Thompson and Yurkutat (1999:5) define compensation as a reward (salary and benefits) that 83

101 is given to an employee in return for services rendered from labour. Compensation has proved to be the most important factor potential candidates consider before accepting an international assignment (Bonache et al., 2006:2137; Sims & Schraeder, 2005:99). Compensation is a key component in the effectiveness of global operations, a crucial link between strategy and its successful implementation, and has become an instrument frequently used by MNEs to guide behaviour in order to reach strategic goals and achieve enterprise objectives (Bonache, 2006:170; Harvey, 1993a:57; Phillips & Fox, 2003:466; Sims & Schraeder, 2005:99; Suutari & Tornikoski, 2001:393). Bonache (2006:160), Bonache and Fernández (1997:458,470), and Reynolds (1997:124) discuss ways in which compensation packages are used by MNEs to maintain the expatriate s standard of living, to guarantee equity among international assignees, and to encourage acceptance of international assignments. According to Bonache (2006:159), Cascio (2006:650), Grobler et al. (2011:647), Harvey (1993a:58), and Tornikoski (2011b:4), effective compensation policies for international assignees should meet the following objectives: Attract, motivate and retain employees who are qualified for international assignments Successfully facilitate transfers between foreign subsidiaries and between the home and host countries Establish and maintain consistent relationships between the compensation of all expatriates and home-country employees Arrange reasonable compensation plans based on skill level, the family s situation, host-country living costs, floating exchange rates, taxes and inflation rates Facilitate re-entry into the home country at the end of the international assignment Be cost-effective Compensation levels for the same position differ between countries in which an MNE operates, due to the fact that HR managers need to take the host-country s laws (tax systems and rates), customs (attitude towards compensation and benefits), environment (inflation, fluctuating exchange rates and cost of living) and employment practices into consideration when designing expatriate compensation plans (Bonache & Fernández, 1997:470; Bonache, 84

102 Sanchez & Zrraga-Oberty, 2009:2135; Cascio, 2006:650; Gomez-Mejia et al., 2010:585; Grobler et al., 2011:647) Approaches to Expatriate Compensation As stated by Grobler et al. (2011:648), enterprises follow six basic approaches when compensating employees on international assignments, which are discussed below: Negotiation A negotiation session takes place in which individual packages that are acceptable to both the enterprise and the international assignee are designed for expatriates before they relocate overseas. Although negotiation is an ad-hoc approach that is quite simple, it can be time consuming, and often produces inconsistencies between individual expatriate packages (Grobler et al., 2011:647; Wentland, 2003:46). Balance-sheet Approach Bonache (2006:162), Grobler et al. (2011:648), Phillips and Fox (2003:467), Rahim (2012:191), Reynolds (1997:124), and Sims and Schraeder (2005:104) point out that inconsistencies often exist in an enterprise s compensation plan because many employees have unique and individually designed packages. The balance-sheet approach is therefore the most popular compensation approach, as it ensures that expatriates neither gain nor lose financially compared with host nationals because of their international posting, but rather maintain their standard of living and purchasing power in different locations. The approach is adaptable to different economic conditions and enterprise strategies, creates equity between assignments and expatriates of the same nationality, solves double taxing problems, and is easy to communicate to expatriates. However, the balance sheet is often complex to administer, expensive, and may result in large disparities between expatriates of different nationalities, and between expatriates and host nationals (Bonache & Fernández, 1997:464; Cascio, 2006:651; Grobler et al., 2011:648; Reynolds, 1997:130; Wentland, 2003:46). According to Bonache et al. (2009:2137), Grobler et al. (2011:648) and Wentland (2003:46), the balance-sheet approach calculates an expatriate s compensation as follows: 85

103 Expatriate compensation = [Home base gross income including bonuses and with taxes and contributions deducted] add/subtract [Cost of living allowance dependent on host country living conditions] add [Incentive premiums] add [Assistance programmes]. Localisation As discussed by Cascio (2006:651), Grobler et al. (2011:648), Reynolds (1997:127), Sims and Schraeder (2005:105), and Wentland (2003:46), enterprises making use of this approach take into account what competitors are paying, and tend to compensate expatriates comparably, or on the same scale as similarly-positioned host nationals. The localisation approach to compensation is often used for permanent employee transfers or when an expatriate with little experience within the home country is transferred to a developed country. Although the localisation approach is designed to reduce an enterprise s costs, possible long-term tax and retirement benefit complications may arise for expatriates, making it a less desirable and practical approach to compensation. Localisation has also been proved to discourage mobility, as each assignment location is financially more or less attractive than other countries, making it more difficult to attract candidates to countries with lower living standards. Lump Sum Under this approach, a total salary (lump sum) is calculated and determined for expatriates prior to their departure. The allowances and incentives which are normally paid under the balance-sheet approach are combined into a lump sum and paid to the expatriates on a monthly basis with their salary, which may then be spent as needed during the assignment (Grobler et al., 2011:648; Reynolds, 1997:129; Suutari & Tornikoski, 2001:392; Tornikoski, 2011a:24; Wentland, 2003:47). Cafeteria According to this approach, highly compensated executives and professionals on international assignment may be presented with an array of benefits or options (as if in a cafeteria), enabling them to decide how the enterprise spends the available funds (Grobler et al., 2011:648; Reynolds, 1997:129; Sims & Schraeder, 2005:106). Expatriates often make a choice between company cars, club memberships and enterprise-provided housing, or those with children may opt for private schooling or au pairing services while in the host country (Grobler et al., 2011:648; Reynolds, 1997:129; Wentland, 2003:47). 86

104 Regional Systems Grobler et al. (2011:648), Sims and Schraeder (2005:106), Suutari and Tornikoski (2001:392), Tornikoski (2011a:24), and Wentland (2003:47) mention that enterprises making use of this system design a tailored compensation plan for all expatriates assigned to a specific region, one that is in line with regional laws, customs and standards. This approach allows enterprises to maintain equity within and between the regions in which they operate, by compensating employees in the home country at lower levels than those working in foreign countries. However, this approach is often difficult to administer, and frequently attracts younger expatriates, who tend to transfer to competitors if they are unable to negotiate better packages as they gain more experience Elements in an Expatriate Compensation Package According to Auzini and Tjakraatmadja (2012:2), Harvey (1993a:58), Hodgetts and Luthans (1993:57) and Tornikoski (2011b:5), an expatriate s compensation package typically consists of three elements: a base salary, benefits or incentives, and allowances. Base Salary Auzini and Tjakraatmadja (2012:2), Hodgetts and Luthans (1993:58), Phillips and Fox (2003:467), and Rahim (2012:188) define base pay as the amount of money an expatriate normally receives in the home country, which is usually paid in the home country s currency, the local currency or in a combination of the two, depending on the expatriate s requirements and future plans. For example, a German expatriate working in a US subsidiary will receive a base salary that reflects the compensation structure in the home country, Germany. An expatriate s base salary serves as a benchmark for enterprises to use when calculating bonuses and benefits. Benefits and Incentives According to Auzini and Tjakraatmadja (2012:2), Hodgetts and Luthans (1993:58), and Phillips and Fox (2003:467), approximately one-third of a domestic employee s compensation package is made up of the various benefits and premiums, which may compose an even larger portion (up to fifty percent) of an expatriate s package. Until recently, the majority of MNEs included their expatriates in their home-country benefits programme in addition to the host country s programme, at no extra cost to the expatriate, which resulted in 87

105 the dual coverage of both country s legal requirements and certain expenses (Hodgetts & Luthans, 1993:58). According to Grobler et al. (2011:647), enterprises are often required by law to provide expatriates with non-salary benefits (such as healthcare, leave and insurance) in their compensation plans. Auzini and Tjakraatmadja (2012:2), Bonache and Fernández (1997:465), Cascio (2006:654), Chaudhry et al. (2012:54), Hodgetts and Luthans (1993:59), and Sims and Schraeder (2005:102) state that intrinsic (financial) and extrinsic (professional development, security, recognition) incentives are offered to candidates to encourage acceptance of an international assignment. Expatriate benefits or incentives usually include, but are not limited to, medical aid coverage, security in the host country, retirement benefits, additional vacation, special or emergency leave, airfare for expatriates and families to visit home on a regular basis, and even coverage of expenses if a family member in the home country passes away. Allowances According to Auzini and Tjakraatmadja (2012:2), Cascio (2006:654), Hodgetts and Luthans (1993:59), Rahim (2012:189), Reynolds (1997:126), and Tornikoski (2011a:23), cost-ofliving allowances are the most expensive element of an expatriate s compensation package and are frequently used to encourage candidates to accept international assignments. A costof-living allowance is consistent with the balance-sheet approach, as it is a payment for differences in living expenses between the home and host countries, providing the expatriate family with the same or similar standard of living that they enjoyed in the home country. Costs incurred by expatriates as a result of income taxes, housing, and goods and services tend to be higher abroad than in most home countries. The enterprise regularly takes responsibility for and settles expatriate costs that exceed normal home-country costs (Cascio, 2006:651; Sims & Schraeder, 2005:101). An expatriate s cost-of-living allowance may consist of relocation expenses, housing allowances, education allowances, and a bonus or hardship allowance (Gomez-Mejia et al., 2010:585; Harvey, 1993a:65; Hodgetts & Luthans, 1993:59; Phillips & Fox, 2003:468; Reynolds, 1997:126). 1. Relocation Allowance Hodgetts and Luthans (1993:59), Phillips and Fox (2003:468), and Rahim (2012:189) define relocation expenses as the charges associated with moving, shipping and storing personal 88

106 furniture, clothing and other possessions accompanying the expatriate family to the foreign country. These expenses may also include the purchase of new vehicles or club memberships in the host country. 2. Housing Allowance Some enterprises provide the expatriate family with a residence in the host country and cover associated moving expenses during the assignment, or allocate a predetermined housing allowance enabling expatriates to purchase or rent their own housing. MNEs may also assist with the sale or lease of the expatriate s house in the home country and pay all closing costs or expenses associated with selling the property (Cascio, 2006:654; Gomez-Mejia et al., 2010:585; Hodgetts & Luthans, 1993:59; Phillips & Fox, 2003:468; Rahim, 2012:189; Reynolds, 1997:126; Sims & Schraeder, 2005:102). 3. Education Allowance Auzini and Tjakraatmadja (2012:2), Cascio (2006:654), Gomez-Mejia et al. (2010:585), Hodgetts and Luthans (1993:59), Rahim (2012:189), and Sims and Schraeder (2005:103) state that the enterprise should cover educational expenses which would not have been incurred had the expatriate family remained in the home country, as well as private schooling costs where host-country conditions deem this necessary. Education allowances usually cover tuition, enrolment costs, textbooks, supplies, transportation costs, residence fees, and school uniforms for the expatriates children accompanying them on assignment. 4. Hardship Allowance Expatriates frequently receive hardship allowances (often referred to as bonuses or premiums) when they are sent on assignment to culturally deprived locations, hazardous areas, war zones, or countries with climatic extremes, political instability, health or safety issues, or a poor quality of life. This allowance may consist of a lump sum or a percentage of the base salary (Auzini & Tjakraatmadja, 2012:2; Cascio, 2006:654; Harvey, 1993a:59; Hodgetts & Luthans, 1993:59; Rahim, 2012:188; Reynolds, 1997:126). Table 2.2 below displays the hardship allowances (or differential pay premiums) for expatriate assignments in selected countries, as determined by the US Department of State. 89

107 Table 2.2 Hardship Differential Pay Premiums for Selected Countries and Assignment Locations, December 2013 Country Place of Assignment Differential Pay Premium AFGHANISTAN Kabul 35% ALBANIA Tirana 20% ALGERIA Algiers 15% ANGOLA Luanda 25% ANTARCTIC REGION POSTS Antarctic Region Posts 25% ARGENTINA Buenos Aires 0% ARMENIA Yerevan 20% AUSTRALIA Alice Springs 10% AUSTRIA Vienna 0% AZERBAIJAN Baku 20% BAHAMAS Andros Island 10% BAHRAIN Bahrain 10% BANGLADESH Dhaka 30% BARBADOS Barbados 5% BELARUS Minsk 25% BELGIUM Belgium 0% BELIZE Belmopan 20% BENIN Cotonou 20% BERMUDA Bermuda 0% BOLIVIA La Paz 25% BOSNIA-HERZEGOVINA Banja Luka 15% BOTSWANA Gaborone 10% BRAZIL Rio de Janeiro 10% BRUNEI Bandar Seri Begawan 15% BULGARIA Bulgaria 10% BURKINA FASO Ouagadougou 20% BURMA Rangoon 30% BURUNDI Burundi 25% CAMBODIA Cambodia 25% CAMEROON Cameroon 20% CANADA Northwest Territories 20% CAPE VERDE Cape Verde 25% CENTRAL AFRICAN REPUBLIC Central African Republic 35% CHAD Chad 30% CHAGOS ARCHIPELAGO Chagos Archipelago 10% CHILE Chile 0% CHINA Beijing 15% COLOMBIA Barranquilla 10% COOK ISLANDS Rarotonga 10% COSTA RICA San Jose 0% COTE D IVOIRE Abidjan 20% CROATIA Croatia 0% CUBA Havana 25% CYPRUS Cyprus 0% Source: Adapted from US Department of State (2013) 90

108 Table 2.2 (continued) Hardship Differential Pay Premiums for Selected Countries and Assignment Locations, December 2013 Country Place of Assignment Differential Pay Premium CZECH REPUBLIC Czech Republic 0% DEMOCRATIC REPUBLIC OF THE Democratic Republic of 30% CONGO the Congo DENMARK Denmark 0% DJIBOUTI Djibouti City 30% DOMINICAN REPUBLIC Dominican Republic 20% ECUADOR Guayaquil 15% EGYPT Cairo 15% EL SALVADOR El Salvador 15% EQUATORIAL GUINEA Equatorial Guinea 30% ERITREA Eritrea 30% ESTONIA Estonia 10% ETHIOPIA Addis Ababa 25% FIJI Fiji 15% FINLAND Finland 0% FRANCE France 0% GABON Libreville 15% GEORGIA Georgia 0% GERMANY Germany 0% GHANA Ghana 20% GREECE Athens 5% GREENLAND Greenland 25% GRENADA Grenada 10% GUATEMALA Guatemala City 15% GUINEA Guinea 30% GUINEA_BISSAU Guinea-Bissau 25% GUYANA Guyana 25% HAITI Haiti 30% HOLY SEE Holy See 0% HONDURAS Honduras 15% HONG KONG Tegucigalpa 15% HUNGARY Papa 5% ICELAND Reykjavik 5% INDIA Mumbai 20% INDONESIA Bandung 30% IRAQ Baghdad 25% IRELAND Ireland 0% ISRAEL Israel 0% ITALY Italy 0% JAMAICA Kingston 15% JAPAN Japan 0% JERUSALEM Jerusalem 5% JORDAN Jordan 5% KAZAKHSTAN Almaty 25% Source: Adapted from US Department of State (2013) 91

109 Table 2.2 (continued) Hardship Differential Pay Premiums for Selected Countries and Assignment Locations, December 2013 Country Place of Assignment Differential Pay Premium KENYA Kenya 30% KIRIBATI Kiribati 0% KOREA Busan 5% KOSOVO Kosovo 25% KUWAIT Kuwait 10% KYRGYZSTAN Kyrgyzstan 25% LAOS Laos 25% LATVIA Latvia 5% LEBANON Lebanon 20% LESOTHO Lesotho 20% LIBERIA Liberia 30% LIBYA Libya 35% LITHUANIA Lithuania 5% LUXEMBOURG Luxembourg 0% MACEDONIA Macedonia 10% MADAGASCAR Madagascar 25% MALAWI Malawi 25% MALAYSIA Malaysia 10% MALI Mali 25% MALTA Malta 0% MARSHALL ISALNDS Majuro 20% MAURITANIA Nouakchott 25% MAURITIUS Mauritius 5% MEXICO Ciudad Juarez 10% MICRONESIA Micronesia 20% MOLDOVA Moldova 15% MONGOLIA Mongolia 25% MONTENEGRO Podgorica 15% MOROCCO Casablanca 5% MOZAMBIQUE Maputo 25% NAMIBIA Windhoek 5% NEPAL Nepal 20% NETHERLANDS Netherlands 0% NEW ZEALAND New Zealand 0% NICARAGUA Managua 15% NIGER Niamey 25% NIGERIA Abuja 25% NORWAY Norway 0% OMAN Salalah 15% PAKISTAN Islamabad 25% PALAU Palau 10% PANAMA Panama 0% PAPUA NEW GUINEA Port Moresby 30% PARAGUAY Paraguay 10% Source: Adapted from US Department of State (2013) 92

110 Table 2.2 (continued) Hardship Differential Pay Premiums for Selected Countries and Assignment Locations, December 2013 Country Place of Assignment Differential Pay Premium PHILIPPINES Philippines 20% POLAND Poland 0% PORTUGAL Portugal 0% QATAR Doha 5% REPUBLIC OF THE CONGO Republic of the Congo 30% ROMANIA Romania 10% RUSSIA Moscow 15% RWANDA Rwanda 20% SAINT KITTS AND NEVIS Saint Kitts and Nevis 0% SAMOA ISLANDS Samoa 20% SAO TOME AND PRINCIPE Sao Tome and Principe 25% SAUDI ARABIA Al-Khobar 15% SENEGAL Senegal 20% SERBIA Belgrade 10% SIERRA LEONE Sierra Leone 30% SINGAPORE Singapore 0% SLOVAK REPUBLIC Slovak Republic 5% SLOVENIA Slovenia 0% SOLOMON ISLANDS Solomon Islands 15% SOMALIA Somalia 20% SOUTH AFRICA South Africa 5% SOUTH SUDAN Juba 30% SPAIN Spain 0% SRI LANKA Sri Lanka 20% ST LUCIA Saint Lucia 0% SUDAN Sudan 25% SURINAME Suriname 20% SWAZILAND Swaziland 15% SWEDEN Sweden 0% SWITZERLAND Switzerland 0% SYRIA Damascus 20% TAIWAN Kaohsiung 5% TAJIKISTAN Tajikstan 30% TANZANIA Tanzania 25% THAILAND Bangkok 10% THE GAMBIA The Gambia 20% TIMOR-LESTE Timor-Leste 25% TOGO Togo 30% TONGA Tonga 0% TRINIDAD AND TOBAGO Trinidad and Tobago 5% TUNISIA Tunisia 10% TURKEY Adana-Incirlik 10% TURKMENISTAN Turkmenistan 25% UGANDA Kampala 25% Source: Adapted from US Department of State (2013) 93

111 Table 2.2 (continued) Hardship Differential Pay Premiums for Selected Countries and Assignment Locations, December 2013 Country Place of Assignment Differential Pay Premium UKRAINE Ukraine 20% UNITED ARAB EMIRATES Abu Dhabi 0% UNITED KINGDOM United Kingdom 0% URUGUAY Uruguay 0% UZBEKISTAN Tashkent 25% VANUATU Port Vila 15% VENEZUELA Venezuela 20% VIETNAM Hanoi 20% YEMEN Yemen 30% ZAMBIA Lusaka 15% ZIMBABWE Zimbabwe 25% Source: Adapted from US Department of State (2013) Expatriate Taxation Due to the complexity of expatriate compensation systems, taxation processes are more complicated for enterprises and international assignees, with expatriates often being subject to taxes in both the home and host countries (Cascio, 2006:654; Grobler et al., 2011:648; Harvey, 1993a:60; Hodgetts & Luthans, 1993:59; Phillips & Fox, 2003:468; Reynolds, 1997:125; Sims & Schraeder, 2005:103). Enterprises therefore follow one of the following strategies: Laissez-faire This approach entails the expatriates paying their own taxation, and is usually used by smaller enterprises or those who are beginning to expand internationally. Tax equalisation Expatriates may receive bills from both the host and home countries for the same salary. The enterprise withholds from the expatriate s income the tax obligation in the home country, and then pays all the taxes in the host country. Under this approach, there is no financial advantage for an expatriate to be assigned to one country as opposed to another. Tax protection Under this approach, income tax is calculated in the home country on the base salary and compared with the tax that is due in the host country. The expatriate pays the tax up to the amount that he would have paid in the home country; if the host country s tax is higher the enterprise will pay the difference, while the expatriate may keep any windfall as a reward for accepting the assignment. 94

112 Ad hoc Each expatriate is handled differently, depending on the individual package that has been negotiated between him or her and the enterprise International Compensation Problems Studies by Bonache et al. (2009:2145) and Harvey (1993b:787) identified discrepancies between compensation programmes for expatriates, HCNs and TCNs as a major issue related to the compensation of international assignees. Other less significant issues included the impact of the family life-cycle stage on compensation requirements; problems associated with repatriation; comparisons with unsuitable compensation programmes used in the past; and the effectiveness of the compensation evaluation process (Harvey, 1993b:787). Expatriates usually work with similarly qualified local employees; however, they are paid, according to their nationality, on average three times more than a host national in an equivalent position, which is characteristic of an ethnocentric staffing policy (Bonache et al., 2009: ; Harvey, 1993a:58; Hodgetts & Luthans, 1993:58). Reynolds (1997:127) reports that expatriates have been known to cost enterprises two to five times more than their domestic counterparts, with compensation packages more than ten times that of host nationals. This is supported by Phillip and Fox (2003:471), who mention that expatriate compensation may cost an enterprise three to five times more than a domestic employee in a similar position earning the same salary. Understandably, HCNs are not given benefits such as living allowances, tax equalisation or repatriation; however, they fill similar positions within the foreign subsidiary and may deem this practice unfair. Expatriates usually also receive more benefits than TCNs, as TCNs generally possess more cross-cultural competences, enabling them to adapt more easily to foreign cultures. HCNs and TCNs interact frequently with international assignees and are able to assess the expatriates inputs relative to their pay. This often decreases their pay satisfaction and reduces collaboration, motivation, turnover and commitment, and increases absenteeism (Bonache, 2006:169; Bonache et al., 2009: ; Harvey, 1993b:790; Phillip & Fox, 2003:470; Suutari & Tornikoski, 2001:393) Bonache et al. (2009:2145) urge multinational enterprises to justify higher compensation for expatriates by encouraging expatriate sensitivity towards HCNs (screening such personal characteristics during selection), and an understanding by host nationals of an expatriate s contributions and personal sacrifices while living abroad. 95

113 2.14. PERFORMANCE APPRAISAL Fee et al. (2011:368), Harvey and Moeller (2009:287) and Van den Born and Peltokorpi (2010:111) define performance appraisal as a tool used to assess the job performance and development of an enterprise s employees through scales, questionnaires and progress reviews completed by the employee and his or her supervisor or peers. A performance appraisal can be seen as an objective, rational and systematic tool used by enterprises to manage their and their employees performance. Performance appraisals are a means of providing feedback, deciding promotions and terminations, determining compensation, and identifying strengths and weaknesses of employees, as well as identifying development needs that may aid in the career-planning process. Without an accurate appraisal system in place it will be hard for enterprises to distinguish between high- and low-performing employees, allocate rewards fairly, design training programmes, and motivate desired performance outcomes (Appelbaum, Roy & Gilliland, 2011:581; Chiang & Birtch, 2010:1367; Grobler et al., 2011:645; Harvey, 1997b:49; Jafari, Bourouni & Amiri, 2009:93; Martin & Bartol, 2003:120; Van den Born & Peltokorpi, 2010:111). Chiang and Birtch (2010:1367), Grobler et al. (2011:646), Harvey (1997b:47), and Van den Born and Peltokorpi (2010:111) discuss the fact that the primary purpose of an enterprise performance appraisal in the short term is to evaluate employees against their colleagues and their past performance, while in the long term the purpose is to develop communication channels and provide valuable feedback. Appraisals are also important for employee development and subordinate expression and coaching. Although domestic performance appraisals are traditionally conducted annually, appraisal methods are known to vary across cultures and countries. Gregersen, Hite and Black (1996:728) and Martin and Bartol (2003:119) found that events and expatriate actions (both positive and negative) that occur nearer to the time of the appraisal often have a significant impact on appraisal accuracy, a situation referred to as recency error. More frequent evaluations, conducted quarterly, semi-annually or monthly, allow managers to make changes quickly, realise goals, and to continuously monitor expatriates. This makes it easier for MNEs to identify and fix expatriates problems while they are still manageable, provide encouragement and support and recognise achievement (Chiang & Birtch, 2010:1368; Gregersen et al., 1996:728; Harvey, 1997b:46; Harvey & Moeller, 2009:284; Martin & Bartol, 2003:119). 96

114 97 Emma-Louise Webber Appelbaum et al. (2011:574), Fee et al. (2011:368), and Harvey and Moeller (2009:283) point out that performance appraisals for expatriates are often significantly more complex than those conducted in single-culture (domestic) settings. When performing in a host country, variables such as language barriers, conflicting values, geographical distance, and cultural and legal differences come into play, making performance appraisals more challenging. Raters should ensure that the system has a common understanding across the different cultures, and must be aware of how each culture may react to the appraisal and have respect for and an understanding of these reactions. Expatriate performance appraisals should assess both the expatriate and subsidiary in the foreign country. However, raters do not usually know what expatriates accomplish each day during work and are unable to rate their performance at first hand due to the geographical distance (Appelbaum et al., 2011:575; Gregersen et al., 1996:719; Harvey, 1997b:45). Appelbaum et al. (2011:573), Gregersen et al. (1996:713) and Harvey (1997b:42) state that in order to increase the accuracy of international performance appraisals, enterprises should customise domestic appraisal forms for foreign subsidiaries, use multiple raters, increase rater knowledge of foreign countries and cultures, and also increase the frequency of appraisals. On the other hand, Harvey (1997b:57) argues that the use of multiple raters at different points in time may reduce the accuracy of expatriate performance appraisals, as raters struggle to remain consistent between appraisals. According to Chiang and Birtch (2010:1368), Fee et al. (2011:376), Gregersen et al. (1996:727), Harvey (1997b:53) and Hill (2011:617), enterprises often make use of selfappraisals or arrange for expatriates to be appraised by raters from both the home and host countries, who are in executive, supervisory, or human resources positions. Raters may also include locals, host-national colleagues or clients. While expatriates immediate supervisors have been found to be well qualified to evaluate their overall performance, their host-national peers are a more informed source, as they are able to observe the expatriate's performance, cross-cultural managerial skills, communication skills and leadership abilities on a daily basis. Home-country nationals may be biased by distance as well as by their lack of international experience. On the other hand, host-national managers may show bias towards or against expatriates due to their own cultural frame of reference and expectations. The ideal appraisal team would therefore seek to achieve a balance of raters from both the home and host countries, and possibly include former expatriates who were on assignment in the same host country. This multiple-rater system should decrease bias and reduce any possible halo,

115 primacy or first-impression errors that commonly occur in international performance appraisal systems. A study by Gregersen et al. (1996:727) found that an increase in the number of raters used had a positive relationship with the accuracy of performance appraisals. Many authors (Appelbaum et al., 2011:579; Fee et al., 2011:368; Jafari et al., 2009:95; Luthans & Farner, 2002:784; Van Mook, Gorter, O Sullivan, Wass, Schuwirth & Van der Vleuten, 2009:e155) recommend that enterprises make use of a 360-degree evaluation process when conducting performance appraisals for expatriate managers on international assignments. A 360-degree appraisal system includes evaluations from a variety of sources, which allows MNEs to evaluate the performance of both the foreign subsidiary and the expatriate within the context of the host culture. These sources may include supervisors, peers, subordinates and direct reports, as well as supplier and customer feedback. The 360- degree feedback approach gathers information for developmental purposes by identifying strengths and weaknesses, and for administrative purposes in the form of performance appraisals, training, evaluation and promotional opportunities. This approach is highly beneficial to enterprises, as it aims to gather a multitude of information from a variety of stakeholders that is fed back to expatriates, enabling them to develop action plans that will ultimately improve the enterprise s performance. One of the main reasons why performance appraisals fail is psychometric errors, which include leniency, halo effect, restriction of range, recency and contrast. All of these can be reduced and their effect minimised by using a multi-rater evaluation system such as the 360- degree feedback approach. In some cases a self-evaluation may be included, which can increase the effectiveness of the appraisal system and improve an employee s satisfaction with the evaluation and his or her perception of justice and fairness (Appelbaum et al., 2011:573; Harvey, 1997b:56). Appelbaum et al. (2011: ) identify three major challenges that enterprises face when conducting international performance appraisals: Individualist and Collectivist Cultures Appelbaum et al. (2011:576), Guan (2012:19) and Ng, Koh, Ang, Kennedy and Chan (2011:1036) mention that employees of an individualistic culture tend to rate their performance more favourably than those belonging to collectivist cultures. Members of an 98

116 individualistic culture focus primarily on themselves and their immediate families, while in a collectivist culture people tend to consider the needs of the group (families, work units) to be more important than their own. In individualistic cultures, performance appraisals provide a means for expatriates to enhance their personal impressions and status within the enterprise, and protect their egos. On the other hand, in collectivist cultures, where relationships are more important than individual interests, multi-rater appraisals are viewed as judgemental, and feedback regarding performance is viewed as detrimental to the harmony of the group s interpersonal relationships (Appelbaum et al., 2011:576; Chiang & Birtch, 2010:1370; Grobler et al., 2011:646; Ng et al., 2011:1036). Cultural Differences and Leniency Error Appelbaum et al. (2011:576), Guan (2012:5) and Ng et al. (2011:1033) state that leniency error occurs when a manager tends to be more lenient than other managers during performance appraisals or assigns higher ratings to some employees when compared with others. These managers want to be liked and are unwilling to give negative feedback. According to Ng et al. (2011:1033), rating biases are often exacerbated when managers possess cultural beliefs that are inconsistent with the practice of multisource feedback (involving peers and subordinates in the appraisal process). In certain countries and cultures, employee evaluations tend to be inflated and do not reflect the reality of an employee s performance for the appraisal period. For example, Arabic countries still have certain old-fashioned historic practices in place. An Arabic employee who is punished often does not know why or is not informed of the reasons for the punishment, which is contradictory to most enterprise s fairness and ethical policies. Married employees are also often given more positive performance evaluations, as losing their jobs would be considered a disgrace to them and their family. In such cultures supervisors, peers and subordinates are often inclined to overestimate a married employee s performance, in order to avoid any complaints and confrontation (Appelbaum et al., 2011:576; Van Mook et al., 2009:e154). Trust and Open Relationships Trusting and open relationships between supervisors and employees are essential to achieving an effective performance appraisal. Developing trust is challenging when supervisors and employees are working in different countries, as is often the case with expatriates. These 99

117 expatriates are unable to interact frequently with their supervisors to discuss job-related performance issues. Different cultural backgrounds, time-zone differences, language barriers, culture, gender and social status may inhibit the development of trusting and open relationships between an expatriate and his or her supervisor. These challenges have been known to widen the gap between the rater and the employee, which may result in an unfair performance appraisal. Expatriates should openly discuss their performance results with their supervisors to reduce the inevitable perception gap and improve communication and trust (Appelbaum et al., 2011:577; Chiang & Birtch, 2010: ). Training is a crucial factor to conducting effective performance appraisals and reducing bias. Enterprises should train and retrain their managers on how to conduct performance appraisals and expatriates should be aware of how to set proper goals and objectives at the start of each year. Raters should also develop a relationship with expatriates by giving feedback on a frequent and ongoing basis (Appelbaum et al., 2011: ; Harvey, 1997b:42). According to Harvey (1997b:43-45) and Harvey and Moeller (2009: ), separate and unique performance appraisals should be developed for international subsidiaries and expatriate managers, as their situations in the host country differ significantly from those of head office. Reasons for developing such unique performance appraisals are as follows: Diverse Employees to be Managed Expatriates assigned to overseas subsidiaries may be home-country nationals, host-country nationals or third-country nationals, with different compensation and benefits packages, career paths and opportunities and performance expectations (Harvey, 1997b:43; Harvey & Moeller, 2009:284). According to Fee et al. (2011:368), Harvey (1997b:41) and Harvey and Moeller (2009:284), appraisal instruments may need to be customised to accurately measure subjective information in a cultural context, and to take local values, norms, attitudes, beliefs and myths into account. Multiplicity of External Environments Harvey (1997b:43), Harvey and Moeller (2009:285) and Martin and Bartol (2003:118) state that expatriates may be faced with events in the environment that may impede or benefit their performance. The level of economic development, changes in inflation, unemployment and interest rates, governments involvement and legal constraints often have an impact on an expatriate s job performance. If the appraisal process does not address significant differences 100

118 in such variables between the home and host countries, performance appraisals within an enterprise will probably be unfair and inconsistent. Limited Understanding of the Differences in the International Marketplace Domestic raters who do not have international experience or are unfamiliar with the various aspects of expatriate assignments may have difficulty in providing fair and reasonable performance appraisals. Raters need to clearly understand the foreign situation and the unique context within which the expatriate is performing. Domestic and international appraisal processes should then be separated, to highlight the differences and improve the chance of fair overall evaluations (Fee et al., 2011:368; Gregersen et al., 1996:712; Harvey, 1997b:43; Harvey & Moeller, 2009:285). Differences in Organisational Structure, Strategy and Culture According to Harvey (1997b:44) and Harvey and Moeller (2009:285), domestic and international subsidiaries may have different goals and strategies in place, the degree of centralisation of decision making (differences in authority and autonomy) may differ, and the cultural fit between headquarters and foreign subsidiaries may be inconsistent, which may affect the manner in which appraisal processes are conducted. Non-comparable or Missing Data Data often varies significantly between foreign subsidiaries and headquarters and cannot be compared during appraisals. For this reason, many enterprises that make use of standardised performance evaluations do not accurately appraise their expatriates. The comparison of home-country and expatriate managers performance should be based on comparable data and standards (Harvey, 1997b:57; Harvey & Moeller, 2009:285). Time, Cost and Distance Issues The time it takes for expatriates to adjust to the foreign environment should be reflected in the frequency of their appraisals in order to produce an accurate evaluation of their performance (Harvey, 1997b:44; Martin & Bartol, 2003:119). Fee et al. (2011:368), Harvey (1997b:57) and Harvey and Moeller (2009:286) mention that the allowances for performance evaluations need to be accommodated to the international environment, because the rater and expatriate are separated both geographically and by time. Gregersen et al. (1996:719) point out that those raters who are geographically removed from the expatriate, such as home- 101

119 country supervisors, have not had the opportunity to observe the expatriate in the work environment and may not have access to relevant on-the-job information. It is therefore important for host-country nationals to also be included in the evaluation process. Using Appraisal Information for Developmental Purposes Performance appraisals should provide data on how to develop expatriates in order to reduce the high failure rate. The appraisal system should increase expatriates understanding of career opportunities and how international assignments may enhance their careers (Harvey, 1997b:45; Harvey & Moeller, 2009:286) REPATRIATION Repatriation can be defined as the process that is initiated prior to the departure of an expatriate, continues during the international assignment, and is terminated upon the return of the expatriate and the family to the home country. Repatriation is therefore the process of preparing expatriates and their families for their return to their home country (Frändberg & Kjellman, 2005:2; Harvey & Moeller, 2009:286; Hill, 2011:615; Mendenhall et al., 1987:332; Reiche & Harzing, 2009:25). International assignments can often be enjoyable, financially lucrative and career-enhancing experiences for expatriates. However, one of the biggest international problems faced by MNEs is the management of repatriation (Collings et al., 2007:201; Forster, 1997:428; Nery- Kjerfve & McLean, 2012:614; Stahl et al., 2002:222). MacDonald and Arthur (2005:145) and Nery-Kjerfve and McLean (2012:618) state that repatriation is often an overlooked aspect of international assignments, even though it pertains to the expatriate s career development. Despite the fact that expatriate literature indicates that repatriation and its associated reverse culture shock can prove to be more difficult for the expatriate and their family than the initial relocation experience, Collings et al. (2007:201), Grobler et al. (2010:651), MacDonald and Arthur (2005:145), and Pattie, White and Tansky (2010:370) found that enterprises are not providing repatriation programmes or aiding expatriates in the readjustment process. Harvey (1989:136) found that only 31 percent of enterprises provided formal repatriation programmes for expatriates returning home. According to Pattie et al. (2010:359), enterprises prefer to hire or promote executives who have international experience over those with only domestic work experience. These 102

120 international executives are given greater job responsibilities, and are more likely to perform at higher levels and receive a higher level of compensation. Yet despite the fact that international experience is so highly regarded by MNEs, very few enterprises have clear programmes or practices designed to ease the repatriation process and retain expatriates after their return to the home country (Collings et al., 2007:201; Harvey & Moeller, 2009:282; Nery-Kjerfve & McLean, 2012:614; Pattie et al., 2010:359) Challenges of Repatriation According to Harvey and Moeller (2010: ), various issues arise during the repatriation process as expatriate families return to their home country: Financial Issues Harvey (1989:133) and Harvey and Moeller (2010:288) point out that when expatriates return to their home country, they no longer receive the allowances and assistance they had during the assignment. Expatriate families often need to make large financial commitments (housing, cars, furniture, education) when they return, and struggle as a result of this simultaneous loss of allowances and additional funds. This increases their stress and anxiety levels and inhibits their ability to readjust to the home country (Black & Gregersen, 1991b:678; Harvey, 1989:133) A study by Black and Gregersen (1991b:688) found that 25 percent of repatriates experienced financial issues, especially when they needed to purchase a new house. According to Cascio (2006:660), 68 percent of expatriates are unsure of what their positions in the enterprise will be when they return to the home country. Fifty-four percent of expatriates return to lowerlevel jobs, while only 11 percent of expatriates are promoted on their return; 77 percent of repatriates were found to have less disposable income when they returned home than they had had during the international assignment, resulting in various financial difficulties for the family. Family Issues Various issues arise when expatriate families return to their home country. The expatriate is required to settle into a new position, the children need to be reintegrated into schools and the trailing spouse often requires assistance with his or her career, especially since the family no 103

121 longer receives allowances or hardship pay (Grobler et al., 2010:651; Harvey, 1989:134; Harvey & Moeller, 2010:288). Individual Expatriate Manager Issues Harvey (1989:133), Harvey and Moeller (2010:288), Hill (2011:615), Hurn (2007:15), Nery- Kjerfve and McLean (2012:615), and Shen and Hall (2009:801) mention that repatriates are often placed in holding or standby positions, or in positions well below their level of aptitude. The enterprise does not make use of the skills that these expatriates acquired during the assignment, and expatriates usually end up questioning the goals and objectives of the international assignment. Expatriates expectations of possible new positions or promotions in the home country are often not realised when they return home, increasing the turnover rate. Forster (1997:428) found that only 23 percent of expatriates expectations regarding their return were met. Other managers may observe the problems experienced by repatriates, and be unwilling to accept international assignments in the future (Baruch & Altman, 2002:249; Grobler et al., 2010:651; Harvey, 1989:132; Nery-Kjerfve & McLean, 2012:620; Shen & Hall, 2009:802). Enterprise Issues As mentioned by Harvey and Moeller (2010:289), expatriates may even be asked to remain in the foreign country longer until the home country has a position available for them. Expatriates are often uncertain about their length of stay in the foreign country, as the enterprise is unable to accommodate them at headquarters (Mendenhall et al., 1987:337). This de-motivates expatriates and their families, increases costs for the enterprise and increases the stress levels of both the expatriate and the HR managers. Future Career Issues Black, Gregersen and Mendenhall (1992:738), Harvey and Moeller (2009:290), and Malek (2011:200) state that enterprises often feel that repatriates do not require as much attention as expatriates leaving for an assignment, because they are coming home. These enterprises therefore fail to develop repatriation processes and, as a result, struggle to attract other managers for future expatriate positions. The lack of a well-articulated career path may reduce the attractiveness of international assignments for potential future expatriates. Baruch and Altman (2002:242) describe the return process for expatriates as a career disaster, while Mendenhall et al. (1987:337) refer to an international assignment as a haphazard, ill-planned 104

122 affair. When they return to the enterprise s headquarters, expatriates often experience a loss of career and promotional opportunities (Mendenhall et al., 1987:337; Nery-Kjerfve & McLean, 2012:615) Gomez-Mejia et al. (2010: ) state that between 20 and 40 percent of repatriates leave the enterprise shortly after their return to the home country, with almost half of repatriates leaving the enterprise within two years. Repatriates frequently confront the following four issues on their return to the home country: A Lack of Respect for Acquired Skills International assignments provide expatriates with a variety of valuable skills and information that they are able to circulate between international subsidiaries. On their return to the home country, their peers and supervisors at the headquarters may show a lack of interest and appreciation for their new-found skills and expertise. Expatriates become professionally unproductive and dissatisfied when their enterprise fails to capitalise on their international experience; thus they often seek employment elsewhere (Gomez-Mejia et al., 2010:578; Hill, 2011:615; Hurn, 2007:15; Nery-Kjerfve & McLean, 2012:615; Stahl et al., 2002:223). Pattie et al. (2010:368) found that 43 percent of HR managers attributed voluntary turnover to the poor utilisation of the international skills expatriates acquired during the assignment. Gomez-Mejia et al. (2010:578) state that only 12 percent of repatriates felt that their international assignment had enhanced their career development, and almost two-thirds of repatriates were of the opinion that the enterprise did not take advantage of the knowledge and skills they had acquired while overseas. Expatriates become frustrated when they realise they are unable to immediately use their newly acquired skills and experience. As a result, MacDonald and Arthur (2005:154) advise enterprises to create opportunities for repatriates to use the skills and expertise they acquired during the international assignment. Loss of Status Three-quarters of repatriates have reported experiencing a substantial loss of prestige, power, independence and authority once they return to the enterprise s headquarters. This causes extreme distress and negatively affects an expatriate s adjustment (Black & Gregersen, 1991b:677; Bonache & Fernández, 1997:466; Gomez-Mejia et al., 2010:579; Harvey, 1989:133; MacDonald & Arthur, 2005:152; Mendenhall et al., 1987:336). 105

123 Pattie et al. (2010:368) found that 32 percent of enterprises stated that a loss of autonomy was the primary reason for repatriate turnover; 26 percent found that repatriates felt they had taken a step back in their career once they returned to the home country; while 26 percent of enterprises mentioned that expatriates left the MNE because they were offered better jobs. A study by Forster (1997: ) found that 37 percent of repatriates experienced a reduced work status ; 32 percent reported a downward career move; while 16 percent of repatriates experienced a decrease in their responsibilities. Gomez-Mejia et al. (2010:579) state that the resultant disappointment when they return leads to 77 percent of repatriates accepting international positions with another enterprise or competitor rather than taking up a position in the domestic office. A study by Stahl et al. (2002:222) found that 51 percent of expatriates were willing to leave their enterprise to pursue opportunities in another. Expatriates who work for competitors transfer valuable knowledge and technological know-how, which could otherwise be retained through adequate repatriate training and support processes. Collings et al. (2007:201) mention that 20 percent of repatriates wish to leave their enterprise upon their return, while many studies (Black & Gregersen, 1991b:672; Black et al., 1992:738; Yeaton & Hall, 2008:77) mention that roughly 25 percent of expatriates leave their enterprise within one year of returning home. Hill (2011:615) quotes figures from the Conference Board Study that indicate that 15 percent of expatriates leave the enterprise within a year, and 40 percent leave within three years. Black et al. (1992:752) state that repatriate turnover is almost double that of domestic employees. This is supported by Baruch and Altman (2002:241), who mention a study by Dowling, Schuler and Welch (1994) which found that between 20 and 40 percent of expatriates leave their enterprises within two years of returning to the home country, compared with five to ten percent of domestic employees. Poor Planning for Return Position Gomez-Mejia et al. (2010:579) state that more than half of expatriates are unaware of what position awaits them once they return to the home country, while Hill (2011:615) mentions that 60 to 70 percent of expatriates are unsure of what their position within the enterprise will be when they return. Mendenhall et al. (1987:336) point out that a major problem experienced by MNEs is that no position exists for the expatriate on his or her return. This uncertainty regarding their career causes a lot of stress and anxiety for expatriates and their families and inhibits their adjustment (MacDonald & Arthur, 2005:148). 106

124 MacDonald and Arthur (2005:149) quote a study by GMAC Global Relocation Services, which found that 70 percent of repatriates had no post-assignment guarantee. Nineteen percent of enterprises included in a study by Pattie et al. (2010:367) reported that repatriates contracts were terminated because there was no position for them upon their return. Reverse Culture Shock According to Baruch and Altman (2002:249), Black and Gregersen (1991b:674), Gomez- Mejia et al. (2010:580), MacDonald and Arthur (2005:147), and Nery-Kjerfve and McLean (2012:615), expatriates are usually unaware of the psychological adjustments they have made until they return home. Expatriates must once again adjust on a full-time basis to interacting with home nationals. They usually find it extremely difficult to unlearn the foreign culture and acquire knowledge about the home culture from a new perspective. Gomez-Mejia et al. (2010:580) found that 80 percent of repatriates experience reverse culture shock which may lead to alienation, a sense of uprootedness, and disciplinary problems that may cause repatriates to take up positions with competitors. According to Harvey (1989:132) and Hurn (2007:14-15), expatriates do not anticipate the sense of loss and isolation that results from a lack of understanding of current behaviour in the home country. When expatriates are assigned to an international assignment, they expect adjustment to the foreign environment to be difficult and so prepare accordingly. Once they return to the home country they expect to encounter little change, but the reality is that things have often changed considerably. Frequently the expatriate family returns to find they have missed out on many events, fads and trends that occurred during the international assignment, inhibiting their adjustment. Black and Gregersen (1991b:688) found that 38 percent of repatriates experienced significant difficulties with readjusting to the home country. Repatriates involved in this readjustment process need support not only from family and friends but also from their employers. Upon returning from their overseas assignment many repatriates lack an awareness and/or understanding of changes in their home office and how these changes may affect their ability to navigate re-entry. Changes expatriates encounter include individual changes (attitudes, beliefs and values) and changes in the home country (technology, social norms, enterprise culture, economic conditions). If they are made aware of these changes, they are able to make the necessary attitudinal and behavioural adjustments before they re-enter the home country. If the enterprise shares this information in a timely manner, expatriate uncertainty will be reduced and their satisfaction and adjustment will be 107

125 increased (Black et al., 1992:740; Nery-Kjerfve & McLean, 2012:616; Pattie et al., 2010:361) Strategies for Successful Repatriation Malek (2011:201), Nery-Kjerfve and McLean (2012:615), and Pattie et al. (2010:364) explain that returning home from an international assignment can be a very stressful time (even more so than expatriation) for expatriates and their families and it may take several months for the family to readjust to the home country and culture. Those who adjust slowly may experience performance issues and enterprises may have trouble with retention once expatriates return to the home country. Repatriate training enables enterprises to provide support to ease the readjustment process. Cascio (2006:661), MacDonald and Arthur (2005:150), Nery-Kjerfve and McLean (2012:620), and Pattie et al. (2010:364) advocate that pre-return training eases reverse culture shock and makes expatriates aware of the possible challenges they will face on their return to the home country and their assumption of a new role within the enterprise. This training will point out recent structural, technological, legal or ethical changes in the enterprise. A study by Pattie et al. (2010:367) revealed that only five to seven percent of enterprises provided some sort of repatriate training to their expatriates, while 70 percent provided no training at all. Housing and relocation assistance is usually provided to expatriate families when they arrive in the foreign country. However, when returning home, enterprises expect expatriates to be more easily adjusted and therefore neglect to provide a similar support structure. This discontinuation of enterprise housing assistance creates additional stress and has a negative effect on the family s adjustment (Black et al., 1992:752; Harvey, 1989:133; Harvey & Moeller, 2010:288; Pattie et al., 2010:364). However, a study by Pattie et al. (2010:367) found that 60 percent of enterprises provided some form of relocation support to their repatriate families, which has been proved to reduce turnover as well as the stress associated with moving back home. Career sponsors may be appointed in the foreign environment to ease transition or in the home country to protect the expatriate s career interests while they are assigned overseas. Such sponsors or mentors are assigned to keep in touch with expatriates, monitor their progress and convey important and relevant information regarding the enterprise and home 108

126 country. Mentors help expatriates with networking in the host country and transferring knowledge between subsidiaries and headquarters. They also provide contacts, valuable information and support, career direction and repatriation assistance and help expatriates stay updated on the enterprise s current affairs. Sponsors or mentors have been positively related to repatriate adjustment and may include the repatriate s colleagues, previous repatriates or human resource personnel (Black et al., 1992:747; Cascio, 2006:661; Hurn, 2007:15; MacDonald & Arthur, 2005:150; Nery-Kjerfve & McLean, 2012:621; Yeaton & Hall, 2008:77). The study by Pattie et al. (2010:367) found that only seven percent of enterprises provide a sponsor for repatriates to guide them through the re-entry process. In order to facilitate a successful repatriation process, enterprises need to develop a wellarticulated process of repatriation prior to, during and after the international assignment. According to Harvey and Moeller (2009:286), successes can be divided into three phases: Phase 1: Pre-expatriation Planning The various issues experienced by expatriates on their return to the home country are often due to the country s characteristics to which they are assigned. The enterprise should assess the nature of the assignment and the nature and context of the foreign environment before an expatriate s departure. The more culturally distant the host country is, and the more difficult the assignment, the harder it will be for the expatriate and their family to adjust (Black & Gregersen, 1991b:689; Black et al., 1992:749; Harvey & Moeller, 2009:286). The family often struggles to adjust on their return according to the level of adjustment they had to make on their arrival in the host country. Prior to their departure for the assignment, the enterprise should provide career counselling, and the expatriate and their enterprise should discuss appraisal methods, and possible issues that may arise while overseas, providing them with a realistic job preview. They should also be made aware of the diverse problems they may experience when returning to the home country and receive training regarding these issues before they return home (Harvey, 1989:138; Hurn, 2007:11; MacDonald & Arthur, 2005:153; Shen & Hall, 2009:796). Pattie et al. (2010:360) state that less than 37 percent of enterprises provide some form of career planning for repatriates, while only one-third of MNEs have strategies in place that address the numerous issues repatriates encounter when returning home. 109

127 Phase 2: Expatriation Phase Black and Gregersen (1991b:676), Black et al. (1992:747), Harvey and Moeller (2009:286), Hurn (2007:15), and Nery-Kjerfve and McLean (2012:620) advise that enterprises provide pre- and post-return training and orientation for expatriates and their families. Expatriates and their families should receive repatriation training during the international assignment, and performance appraisals should include formal repatriation discussions. Training should cover reverse culture shock, a potential return strategy, sensitive areas such as redundancy or possible demotion, as well as changes that have occurred in the expatriate family, the home country, and the enterprise. Repatriation training programmes provide expatriates with valuable information and display an enterprise s concern for its expatriates and their families (Hurn, 2007:15). Pattie et al. (2010:360) state that more than 30 percent of enterprises do not discuss repatriation with their expatriates, and more than 40 percent of those that do, do so within the last six months of an expatriate s international assignment. Forster (1997:429) found that more than a quarter of expatriates felt that they were not given sufficient opportunities to discuss their return to the headquarters with those responsible for managing repatriation. The same study also found that 42 per cent of these expatriates felt that they were not given adequate time to prepare for repatriation. Black et al. (1992:747), Grobler et al. (2010:651), Hill (2011:615), Hurn (2007:15). MacDonald and Arthur (2005:150), and Pattie et al. (2010: ) suggest that enterprises maintain communication channels with expatriates (and vice versa) during the assignment to assist with their assimilation and adjustment. Such channels provide expatriates with updates and changes within the home office, tailor-made schooling and financial advice, local community issues, and possible types or levels of positions that will be available when they return. Expatriates who are in regular contact with the home office experience fewer surprises and unmet expectations when they return. Frequent visits to the home country as well as enterprise newsletters help expatriates keep in touch with colleagues, keep up to date on structural and technological changes, and be aware of the business climate in the home country. This will prepare expatriates in advance for their return to the home country, reduce their uncertainty associated with adjustment, and enable them to manage their careers while overseas. 110

128 Phase 3: Repatriation Phase According to Harvey (1989:133), Harvey and Moeller (2009:286), and Nery-Kjerfve and McLean (2012:620), an expatriate s career path should remain the central focus of the repatriation process. Expatriates are often placed in temporary positions when the enterprise is not fully prepared for their return or when timing becomes an issue. Instead of placing expatriates in standby positions, the enterprise should give them sufficient time off to relocate and re-adjust to the home country (MacDonald & Arthur, 2005:151). Hurn (2007:15) advises enterprises to conduct exit interviews whenever possible to determine expatriates reasons for leaving the enterprise once they have returned to the home country. Repatriate debriefing interviews should also be conducted immediately upon the return of the expatriate. These interviews help expatriates re-establish old ties with the home organisation and may aid them with their career development. Such interviews address technical and general issues that arose during the assignment, and provide useful insights into the foreign environment for future use (Grobler et al., 2010:646; MacDonald & Arthur, 2005:151; Nery- Kjerfve & McLean, 2012:620) CHAPTER SUMMARY Due to the intense competitive pressures from globalisation, multinationals need to establish foreign subsidiaries, enter into joint ventures and strategic alliances, and employ international managers in order to remain competitive and enter into global markets. This chapter emphasised the importance of, and the challenges associated with, attracting, developing and retaining expatriates in a multinational enterprise. Whether or not an enterprise s resources and capabilities provide it with a sustainable competitive advantage can be determined by the resource-based view of SHRM. As mentioned early in the chapter, for a resource to provide an enterprise with a sustainable competitive advantage it must be valuable, rare, inimitable, non-substitutable and exploitable. An MNE s human resources have the highest probability of being a source of sustained competitive advantage, proving IHRM to be of the utmost importance for successful multinationals. This chapter went on to discuss various international strategies that enterprises follow according to the extent to which they participate in global competition, as well as the different forms of expatriation. Enterprise strategies may follow that of a multinational 111

129 enterprise, a global enterprise, an international enterprise, or a transnational enterprise. Expatriation can take three forms: parent-country nationals, host-country nationals and thirdcountry nationals, depending on the nationality of the enterprise s expatriate managers. In addition to the types of expatriate, various staffing policies are available to MNEs which have been known to bring about numerous challenges for enterprises, as they recruit and retain employees sourced from multiple global locations. These policies include an ethnocentric staffing policy, which makes use of parent-country nationals, a polycentric staffing policy associated with the recruitment of host-country nationals, a geocentric staffing policy, which hires expatriates from diverse backgrounds, and a regiocentric staffing policy, which hires the best third-country nationals within specific regions. It follows, then, that an expatriate is a citizen of one country who is working outside their home country with a planned return to that or a third country. Typical assignment durations, as well as reasons for expatriates accepting an international assignment were then discussed. The key strategic roles of expatriates were also mentioned; namely, to fill positions, to develop managerial skills and to develop the enterprise. An in-depth discussion on expatriate failure (defined as underperformance, premature return or repatriate failure) was included, which covered global and local South African failure statistics, costs of expatriate failure, and reasons for failed assignments. The most common causes of failure include an inability of the expatriate or their spouse to adjust, other family and personal issues, and a lack of cross-cultural skills. This chapter contained a detailed discussion of the expatriation process, which consists of selection, training and development, arrival and support, and finally repatriation, and emphasised the many challenges faced by enterprises throughout the process. Selection processes often prove to be extremely difficult for enterprises, as expatriates are selected on the presence of additional personality and cross-cultural characteristics, in comparison to their domestic counterparts. In addition to selection problems, enterprises experience issues with expatriate preparation and training, as both of these elements are crucial to the expatriate s adjustment to the foreign environment and therefore also to the assignment s success. Because an expatriate s or their spouse s inability to adapt has become the primary cause of failure, it was necessary to include a detailed discussion focusing on different types of adjustment, the various issues that may arise overseas, and what enterprises can do to combat these problems. 112

130 A lack of relevant training prior to an international assignment has been proved to result in culture shock and increase an expatriate s chance of failure. This chapter examined issues confronted during enterprise training programmes and mentioned statistics related to global international training methods, as well as types of training, and how enterprises should go about conducting such programmes. An expatriate s well-being and adjustment during an assignment has been found to be directly related to the support he or she receives while overseas. Chapter 2 emphasised the importance of enterprise support and social networks for expatriate success, and provided advice regarding such matters. One of the most complex issues in IHRM is the design and maintenance of an appropriate compensation and benefits plan for expatriates during the assignment. This aspect proves to be challenging, as HR managers need to consider the host country s laws (tax systems and rates), customs (attitude towards compensation and benefits), environment (inflation, fluctuating exchange rates and cost of living) and employment practices. This chapter covered the six basic approaches to expatriate compensation (negotiation, balance-sheet approach, localisation, lump sum, cafeteria and regional systems), the various elements included in an expatriate s compensation package (base pay, benefits or incentives, allowances and taxation), and mentioned common problems related to the compensation of international assignees. Expatriate performance appraisals are extremely important for enterprise and employee development; however, they are often not conducted on a regular basis, or bias errors occur. This chapter advised enterprises to conduct frequent appraisals that have been adapted for various host-country environments. This would allow managers to make changes quickly, realise goals and to continuously monitor expatriate performance. A discussion regarding repatriation concluded this chapter, as it is the final step in the expatriation process and involves preparing expatriates and their families for their return to the home country. Repatriation is the biggest international problem faced by MNEs and is often overlooked by HR managers. Various issues arise during the repatriation process; these issues are related to: finances, the family, the expatriate, the enterprise, the expatriate s future career, a lack of respect for their acquired skills, a loss of status, poor planning for a return position, and most importantly the inevitable reverse culture shock. To combat these challenges, enterprises should improve pre-expatriation, expatriation and repatriation policies. 113

131 This chapter s primary focus was thus the effective management of an enterprise s IHRM, a crucial component of an enterprise s success. Multinationals face numerous issues regarding the selection, retention and management of expatriates in their foreign subsidiaries. The profound differences between languages, cultures, and legal, political and economic systems complicate an enterprise s staffing, performance and compensation activities. An enterprise s ability to meet strategic objectives and gain a competitive advantage over its rivals is determined by its ability to acquire and build an effective workforce with unique capabilities, proving IHRM to be an essential component of an enterprise s strategy. 114

132 CHAPTER 3 EXPATRIATE TRAILING SPOUSES 3.1. INTRODUCTION The process of relocating to a foreign country for an international assignment often involves an expatriate s family, as the spouse and children frequently accompany the expatriate on assignment (Caligiuri, Joshi & Lazarova, 1999:166; Kupka et al., 2008:1765). Harris (1993:11), Hill (2011:611), Mohr and Klein (2004:1190), Rosenbusch and Cseh (2012:61), and Tung (1987:117) state that expatriates rarely fail due to technical incompetence, but rather because of family and personal issues, concerns regarding the spouse s career, or a lack of intercultural skills that was not addressed during the selection process. Kupka et al. (2008:1765) point out that spouses who accompany the expatriate contribute to an already complicated and competitive situation. Van Heerden and Wentzel (in Van Aswegen, 2008:54) indicate that 62 percent of failed assignments are due to personal reasons, which include the spouse, the family and the expatriates own adjustment. Neither the expatriate nor the spouse are prepared to deal with the level of uncertainty associated with an international assignment, proving expatriation to be more stressful for dual-career couples (Harvey & Wiese, 1998b:33). Despite the fact that the inability of the trailing spouse to adjust has been found to affect the expatriate s adjustment and success, and cause premature return from an assignment, very few studies have focused on the spouses experience abroad and adjustment process during the assignment (Andreason, 2008:386; Caligiuri et al., 1999:166; Konopaske et al., 2005:406; Selmer & Leung, 2003:10; Takeuchi, 2010:1047, Wilson, 2011:9). According to Mäkelä, Känsälä and Suutari (2011:186), Miser (2010:1), and Van Erp et al. (2011b:539), the successful adjustment of an expatriate s spouse is significantly related to the success of an international assignment. The spouse should therefore be included in multinationals preparation, training and support initiatives, in order to reduce the possibility of expatriate failure. Moore (2002:65) states that all spouses require assistance from the enterprise in terms of learning the host country s language, adjusting to the foreign culture, and social support networks to replace family and friends left behind in the home country. 115

133 3.2. ISSUES WITH EXPATRIATE TRAILING SPOUSES Andreason (2008:386), Briscoe et al. (2009:185), Caligiuri et al. (1999:166) and Mendenhall et al. (1987:331) discuss the numerous obstacles that expatriates and their spouses confront in the foreign societies to which they are assigned. These may include culture shock, isolation, homesickness and differences in work-related norms, healthcare systems, housing, schooling, cuisine, language, gender roles and the cost of living. Deen (2011:10), Harvey and Moeller (2009:280), Haslberger and Brewster (2008:326), and Yu, Yi, Chiao and Wei (2005:188) acknowledge that these obstacles tend to create high levels of stress and tension for those spouses who accompany their partners on assignment, which may lead to conflict within the family, affecting the expatriates morale and ability to perform their job effectively. Trailing spouses experience stress as they establish the family in the host country, while simultaneously relocating their careers. These spouses often feel frustrated and helpless as they search for housing, connect utilities and locate grocery stores, doctors and other service providers without understanding the host country s language or culture (Harvey & Wiese, 1998b:34; Selmer & Leung, 2003:11). Many studies (Andreason, 2008:387; Caligiuri et al., 2009:257; Gupta et al., 2012a:3560; Kupka et al., 2008:1767; Selmer & Leung, 2003:11; Van der Zee, Ali & Salomé, 2005:240; Van Erp et al., 2011a:75) have proved that trailing spouses have to deal with greater stress and adjustment difficulties in the host environment than the expatriate. The spouse tends to be less sheltered from the foreign environment and more immersed in the culture than the expatriate, yet tends to be excluded from selection and training processes and receive less incountry support, making it harder for him or her to adjust (Andreason, 2008: ; Copeland & Norell, 2002:258; Davidson & Kinzel, 1996:113; Tung, 1982:65; Wilson, 2011:9; Yu et al., 2005:187). The spouse often struggles overseas; while the expatriate benefits from the stability of a familiar work environment, the spouse is left feeling alienated, without the social support network that was present in the home country. Many enterprises fail to recognise the relationship between the adjustment of the expatriate and that of the trailing spouse while overseas, and as a result they neglect to include the family in the expatriation process. The expatriate spouse s adjustment is a critical determinant of whether or not expatriates will complete their assignment and how well they perform while overseas (Andreason, 2008: ; Selmer & Leung, 2003:10; Tung, 1982:65; Wilson, 2011:9). 116

134 A survey in 2005 by General Motors Acceptance Corporation (GMAC) and National Foreign Trade Council (NFTC) (quoted by Brown, 2008:1019) showed that 47 percent of candidates withdraw themselves from consideration during a multinational s selection process owing to family concerns, while a study by PricewaterhouseCoopers (quoted by Brown, 2008:1019) found that 59 percent of candidates refused an international assignment owing to dual-career issues. Expatriates often refuse international assignments due to spousal career and family concerns, as the pressures associated with such an assignment make families more vulnerable to internal conflict (Kupka et al., 2008:1766; Richardson, 2006:471). Shell and Solomon (in Els, 2007:23) indicate that 48 percent of reasons for turning down an international assignment are spouse related; 27 percent are related to the candidate s children; and 29 percent are related to both the spouse and children Dual-Career Couples As previously defined, a dual-career couple is one in which both partners are employed and psychologically committed to their professions (Harvey & Buckley, 1998:99; Konopaske et al., 2005:408; Mäkelä, Känsälä & Suutari, 2011:185). Selmer and Leung (2003:9) point out that 57 percent of all overseas assignments involved dual-career couples. Ntshona (2007:68) found that 83 percent of South African expatriate managers have a spouse or partner that would either be left behind or would accompany the manager for the duration of the assignment. Ali et al. (2003:564), MacDonald and Arthur (2005:152), Shaffer, Harrison, Gilley and Luk (2001:100), as well as Wu and Ang (2011:2690) state that approximately 80 percent of expatriates take their spouses with them on assignment, while Van Erp et al. (2011a:58) found that 90 percent of all expatriates are accompanied by their partners. Dual-career couples face various issues when accepting an international assignment, most of which arise when the trailing spouse seeks employment opportunities in the host country (Cho et al., 2013:1053; Harvey, 1995:226; Shaffer et al., 2012:1295). Haslberger and Brewster (2008: ) discuss a study that reported that roughly 60 percent of expatriates were accompanied by their spouse on the assignment, 60 percent of whom were employed before the assignment, while only 21 percent were employed during the assignment. A study by McNulty (2012:428) found that only 36 percent of trailing spouses were able to find suitable work in the host country, owing to existing visa or work permit restrictions. Lauring and Selmer (2010:61) discuss a study that found that 54 percent of spouses were employed before the international assignment, emphasising the impact of international assignments on 117

135 dual-career couples. Spouses who give up their jobs tend to experience boredom, underload, and a loss of professional status, which negatively affects the expatriate s adjustment, ultimately leading to failure. According to Harvey and Buckley (1998:101), the following are potential problem areas for enterprises assigning dual-career couples to overseas locations: Higher Refusal Rates to Relocate Internationally Fischlmayr and Kollinger (2010:458), Harvey and Buckley (1998:101), Harvey and Wiese (1998b:34), and Selmer and Leung (2003:9) state that a candidate whose spouse has a career is less likely to accept an international assignment due to family concerns, the spouse s career, and/or the need for two incomes. Extended Adjustment Cycle for Dual-career Couples and their Families Because the lives of dual-career couples are disrupted more than those of single expatriates, and they undergo more severe changes when relocating, the adjustment process in the foreign country proves to be more difficult and stressful (Andreason, 2008:299; Cole, 2012:313; Fischlmayr & Kollinger, 2010:458; Harvey & Buckley, 1998:101; Selmer & Leung, 2003:9). Disruption and/or Discontinuance of Income Although expatriates receive various benefits and allowances, the family s total income is often reduced when visa restrictions and work permits prevent trailing spouses from continuing with their careers in the host country. This may have a significant influence on the family s lifestyle, downgrading their living standards and causing additional stress for expatriates (Fischlmayr & Kollinger, 2010:458; Harvey & Buckley, 1998:101; Konopaske et al., 2005:407; Lauring & Selmer, 2010:61; Moore, 2002:65; Selmer & Leung, 2003:11). Discontinuation of Trailing Spouse s Career Harvey and Buckley (1998:101) and Selmer and Leung (2003:11) state that spouses who are psychologically committed to their work experience career-separation stress. The disruption in their career causes anxiety for the trailing spouses, which is heightened in cases where they are unable to find employment in the host country. Andreason (2008:389) and Selmer and Leung (2003:11) mention that spouses who give up their careers may become lonely and 118

136 despaired, as they set up home alone in the foreign country after having to give up their own careers. Heightened Dysfunctional Family Consequences Copeland and Norell (2002:257), Harvey and Buckley (1998:101), Lazarova et al. (2010:93), Mohr and Klein (2004:1193), and Van der Zee et al. (2005:242) explain that the roles and obligations of family members may alter significantly during an international assignment. Changing a family s configuration will probably bring about additional stress for the expatriate and the spouse. Shaffer et al. (2001:101) discuss the fact that trailing spouses are given increased domestic responsibilities, which results in their feeling overwhelmed and neglected, which inhibits their adjustment. Repatriation Issues associated with the Trailing Spouse During the repatriation process, trailing spouses experience tremendous stress and tension as they attempt to restart their careers in the home country while simultaneously re-establishing the family in the domestic environment. Many spouses feel they require financial support from the enterprise when returning to the home country while they re-establish their careers (Harvey & Buckley, 1998:102; Mäkelä Känsälä & Suutari, 2011:185; Selmer & Leung, 2003:13) Male Trailing Spouses Caligiuri et al. (1999:166) and Harris (2004:826) mention that male trailing spouses usually feel isolated when in a foreign country and face numerous socio-cultural barriers, as they are often the only male in a group of female trailing spouses. Male spouses are often left out of the informal wives network, which provides social support and communicates valuable information regarding the host environment (Moore, 2002:65; Selmer & Leung, 2003:11). According to Moore (2002:66), 70 percent of female spouses feel included in the socialising that occurs between themselves and other expatriates, while only 39 percent of male spouses feel at ease in such situations. Male spouses therefore tend to feel more isolated in the host country, as they have to deal with numerous social stigmas attached to males who give up their careers for their wives. As men are believed to be more naturally suited for labour outside of the home, Harvey and Buckley (1998:114) and Selmer and Leung (2003:11) state that male trailing spouses will 119

137 require different social support programmes from female spouses, as they may not be comfortable socialising only with expatriate wives. A study by Selmer and Leung (2003:18) found that male trailing spouses required more support in terms of counselling, creation of a work position, and financial support, as these areas contribute to the spouse s self-worth and future career development. Although male trailing spouses also require support in the form of financial benefits, job positions or further education expenses, Punnett (1997:248) stresses the need for emotional support for male trailing spouses, as they are often rejected by the locals and feel less worthy if they are unable to contribute to the family financially. Fischlmayr and Kollinger (2010:458), Harris (2004:826) and Selmer and Leung (2003:11-12) state that the productivity of male trailing spouses may be limited, as they may have a hard time finding work or appropriate volunteer activities, which female spouses often become involved in. Further issues with obtaining visas or work permits may force male trailing spouses to give up their careers and accept a more non-traditional role as homemaker, especially since female expatriates have been known to adjust more easily if there is adequate support at home. Male spouses also have to cope with additional obstacles that result from gender-role theories and foreign countries societal norms that see men as the primary breadwinners of the family, while those who do not work are seen as atypical or unacceptable (Fischlmayr & Kollinger, 2010:458; Harris, 2004:826; Lyness & Judiesch, 2008:790; Punnett, 1997:248; Selmer & Leung, 2003:11-12). According to Tzeng (2006:390), male spouses are likely to accompany their wives when they have low career ambitions, work in mobile professions, or are willing to interrupt their careers in return for opportunities to live abroad. However, most men are unwilling to relocate to the host country to support their wife s international assignment. Male spouses may feel less worthy, frustrated and insecure if they are not contributing financially to their families. Societal pressure may force male spouses to work regardless of their wives employment status. Male trailing spouses are then more likely to be concerned about continuing with their careers in the host country than women trailing spouses, in order to fit in with society norms. These issues become severe stressors for a female expatriate and her family, inhibiting the expatriate s work performance and negatively affecting her adjustment (Caligiuri et al., 1999:166; Fischlmayr & Kollinger, 2010:458; Harris, 2004:826; Punnett, 1997:248; Selmer & Leung, 2003:11). 120

138 Work-Family Conflict With home and work domains constantly influencing one another, many authors emphasise the importance of work-life balance in expatriation (Brown, 2008:1019; Deen, 2011:11; Fischlmayr & Kollinger, 2010:455; Mäkelä, Suutari & Mayerhofer, 2011:256; Shortland & Cummins, 2007:39). Work-life balance (WLB) can be defined as the manner in which a person balances work and personal life, or one s satisfaction at work as well as at home, with minimal role conflict between the two domains. The WLB of expatriates is important, because the nature of international assignments, the various foreign locations, the inevitable immersion in the foreign culture, and the cultural and physical distance from the home country often have negative effects on international assignees (Fischlmayr & Kollinger, 2010:458; Lyness & Judiesch, 2008:789; Mäkelä, Suutari & Mayerhofer, 2011: ; Shortland & Cummins, 2007:28). WLB is consistent with Family Systems theory, which maintains that there is equilibrium between the family members, with each member being able to affect the psychological state of the others. Stress experienced by the expatriate in the host country due to gender-role issues, high work demands, dual-career issues, and an unfamiliar environment may affect other family members and upset the family equilibrium, resulting in work-family conflict (WFC) (Caligiuri, Hyland, Joshi & Bross, 1998:599; Fischlmayr & Kollinger, 2010:455; Minuchin, in Harris, 2004:823; Mohr & Klein, 2004:1198; Shortland & Cummins, 2007:35). WFC occurs when responsibilities from both domains compete for limited time and resources. According to this theory, the demands or tension involved in one role (e.g. work) are often so time consuming that it becomes difficult to meet the demands of the other role (e.g. family), resulting in WFC (Fischlmayr & Kollinger, 2010:456; Lyness & Judiesch, 2008:790; Mäkelä, Suutari & Mayerhofer, 2011:258; Shaffer et al., 2001:103; Shortland & Cummins, 2007:35; Van der Zee et al., 2005:240). Shaffer et al. (2001:104), Shortland and Cummins (2007:35), and Van der Zee et al. (2005: ) found that expatriates who struggle to balance work and family often intend to withdraw from their international assignments. WFC has also been found to have a negative effect on the family s well-being, and has been linked to increased health risks, poor parenting, decreased work productivity, marital dissatisfaction, reduced life expectancy and life satisfaction, absenteeism, turnover and low morale. Perceived social support from the 121

139 enterprise has been found to reduce the interference between work and home roles (Harvey & Wiese, 1998b:36; Shortland & Cummins, 2007:35; Van der Zee et al., 2005:241) Crossover Theory According to Crossover Theory, spousal and family cross-cultural adjustment can have a positive or negative effect on the expatriate s adjustment. The stress and strain experienced by the spouse at home leads to stress and strain experienced by the expatriate in the workplace, and vice versa. Expatriate families have been found to play an active role in an expatriate s behaviour and decision on whether or not to accept an international assignment and whether or not to leave early (Andreason, 2008:390; Harvey & Wiese, 1998b:34; Lazarova et al., 2010:96; Richardson, 2006:474; Van der Zee et al., 2005:244; Westman, 2001:718). The stress associated with the trailing spouse s job search and the potential for unemployment may cross over into the expatriate s work domain and have an effect on their performance (Harvey & Wiese, 1998b:34). Selmer and Leung (2003:11) mention that approximately 20 to 25 percent of trailing spouses never find employment in the host country due to difficulties with work permits, visa restrictions, language barriers, a lack of suitable positions, or unrecognised qualifications. When trailing spouses give up their careers they become lonely and frustrated, and often experience a loss of power, self-worth, and identity, which increases stress in the family. This has a cross-over effect and may affect the expatriate s decision to return home early, as spousal dissatisfaction transfers into the work domain and affects expatriate job performance and adjustment (Harvey & Wiese, 1998b:34; McNulty, 2012:421; Selmer & Leung, 2003:11; Van der Zee et al., 2005:245). In a study by Handler et al. (1997:73), 97.3 percent of respondents agreed that expatriate success or failure is directly related to the happiness of the trailing spouse. Numerous studies emphasise the importance of the spouse s support of the expatriate and the assignment, and their adjustment to and satisfaction in the host country (Caligiuri et al., 1999:166; Cole, 2012:309; Konopaske et al., 2005:407; Long, 2010:75; Wang et al., 2011:74). According to Gupta et al. (2012b:26) and Vögel et al. (2008:38), expatriates who are accompanied by their spouses and families require special support and training from their enterprise. For this reason studies by Gupta et al. (2012b:26) and Vogel and Van Vuuren (2008:80) emphasise the importance of spousal preparation, training and support before and during an international 122

140 assignment. These enterprise initiatives should aid them in overcoming the various issues they are likely to face in the unfamiliar host environment PREPARATION REQUIREMENTS Kupka et al. (2008:1774) found that the majority of trailing spouses were rarely prepared for the foreign environment they were to encounter, and ended up home alone in the host country. Trailing spouses are required to give up their careers as well as the structure and continuity in their lives, especially when they relocate to a host country that is culturally distant from their own. Trailing spouses are rarely employed during the assignment, are faced with new tasks and expectations, and become more involved in everyday activities. Enterprise assistance in providing accurate information about the living conditions in the host country is therefore vital to minimise the chance of expatriate failure (Black & Gregersen, 1991a:466; Fish & Wood, 1997:447; Haslberger & Brewster, 2008:334; Kupka et al., 2008:1771; Miser, 2010:1; Mohr & Klein, 2004:1193). Simeon and Fujiu (2000:596) state that adequate pre-departure preparation has proved to aid in the spouse s cross-cultural adjustment. The more prepared expatriates spouses are on their arrival in the host country, the more quickly they will settle into the host environment and the more likely they are to adjust to the foreign lifestyle. Enterprises should conduct information sessions for trailing spouses which cover the host-country s history, politics, economy, customs and festivities, to enable them to understand what it means to live in the country, and to foresee potential issues that may arise. This knowledge of the foreign culture should enhance the spouse s cross-cultural adjustment (Fish & Wood, 1997:455; Miser, 2010:4; Punnett, 1997:247; Simeon & Fujiu, 2000:597; Yu et al., 2005:191). Simeon and Fujiu (2000:598) found that most spouses primary concerns when relocating included housing, schooling, eating habits and their family s safety in the host country. Spousal preparation should then go beyond the basic cultural differences between the home and host countries and address concerns specific to each individual. Davidson and Kinzel (1996:112), Miser (2010:4), and Punnett (1997:251) recommend that enterprises individualise preparation according to the specific needs of each family in terms of their personal knowledge, skills and abilities, the host country s location and characteristics, and the nature of the assignment. Fish and Wood (1997:463) and Miser (2010:4) suggest that enterprises develop preparation programmes that cover potential changes to the spouse s 123

141 quality of life or family role changes, and social behaviours of HCNs, as well as a basic awareness of the enterprise. Ashamalla (1998:58), Black and Gregersen (1991a:469), Punnett (1997:251), and Sharma (2012:15) recommend that enterprises organise orientation visits to the host country for potential expatriates and their spouses before their final departure. These pre-assignment visits allow the couple to familiarise themselves with the local culture and customs, learn appropriate behaviour from HCNs, and set realistic expectations about the assignment and the foreign environment. During these visits the expatriate family will also be able to come to terms with the potential culture shock they will probably face on their arrival. Enterprises should familiarise expatriate families with the day-to-day living conditions of the host country, and what to do and what not to do (Davidson & Kinzel, 1996:112; Fish & Wood, 1997:448; Punnett, 1997:247). Orientation visits provide expatriates and their spouses with first-hand information regarding the foreign country and culture, reducing spousal uncertainties and facilitating their adjustment during the assignment (Ashamalla, 1998:58; Black & Gregersen, 1991a:464; Fish & Wood, 1997:448; Ghafoor et al., 2011:338; Rosenbusch & Cseh, 2012:63; Sharma, 2012:15; Sims & Schraeder, 2004:76). On the other hand, these orientation visits may just become tourist visits or holidays for trailing spouses, who return with an unrealistic perception of the host country s culture and customs. These misperceptions usually result in severe culture shock when the spouses arrive in the foreign country, and realise that the lifestyle they were exposed to during the orientation visit does not reflect reality. Enterprises should therefore avoid sending expatriate families on sight-seeing tours, but rather allow them to experience the host country long enough for them to return home with a realistic view of the country s culture and customs, housing and schooling options, entertainment, and job opportunities (Harvey & Wiese, 1998:368; Punnett, 1997:251; Sims & Schraeder, 2004:76). If trailing spouses have knowledge of the foreign country before their final departure, they will experience less stress and anxiety regarding the expatriate assignment (Simeon & Fujiu, 2000:596). In a study by Vögel and Van Vuuren (2008:85), 98 percent of expatriates on assignment for a period of less than four years, and 80 percent of those on longer assignments, agreed that enterprises should organise orientation visits to the host country for expatriates and their spouses prior to their departure. Despite this support for pre-departure orientation visits, Stahl (in Kupka et al., 2008:1770) found that only 30 percent of spouses were granted such visits, 124

142 125 Emma-Louise Webber while none of the spouses included in the study received orientation briefings prior to their departure TRAINING REQUIREMENTS Brown (2008:1022), Cherry (2010:133), Kim and Tung (2013:1035), Purgal-Popiela (2011:39), and Wilson (2011:72-73) explain that trailing spouses are faced with various uncertainties in the host environment. Such uncertainties arise due to language barriers and cultural differences, as well as other challenges that stem from daily interaction with host nationals. While the expatriates spend the majority of their time at work, the spouses tend to be more immersed in the local culture and struggle to adjust, becoming stressed, confused and overwhelmed by their lack of knowledge and understanding of the foreign country and its culture (Andreason, 2008:387; Caligiuri et al., 2009:257; Ghafoor et al., 2011:337; Gupta et al., 2012a:3560; Van Erp et al., 2011a:75). According to Shortland and Cummins (2007:40), training is essential for the adjustment of trailing spouses, as it reduces culture shock, potential WFC, and the stress associated with relocating to a foreign environment. Dewald and Self (2008:356), Lund and Degen (2010:70), and Kim and Tung (2013:1034) suggest that enterprises provide training for expatriates and their families to familiarise them with host-country practices and to avoid them developing unrealistic expectations about the foreign environment. Fish and Wood (1997:463) state that training eases spousal adjustment in the foreign country, as it usually includes a comprehensive study on the lifestyle of HCNs, the establishment of communication networks, and business involvement, either through a position within the enterprise, or indirect involvement in the international assignment. Caligiuri et al. (1999:176) are of the opinion that MNEs should dedicate sufficient resources to the training of trailing spouses, as spousal support of the international assignment has a significant effect on the cross-cultural adjustment of expatriates. Punnett (1997:245) and Shen and Darby (2006:349) advise enterprises to include trailing spouses in pre-departure and in-country language and cross-cultural training programmes. This is because the spouse s inability to adapt to the new physical and cultural environment is a primary cause of expatriate failure, as it negatively affects the expatriate s adjustment and their intention to stay in the host country (Fischlmayr & Kollinger, 2010:455; Harvey, 1995:226; Jenkins & Mockaitis, 2010:2694; Malek & Budhwar, 2012:222; Mansour & Wood, 2010:388; Peltokorpi & Froese, 2012:739; Rosenbusch & Cseh, 2012:63).

143 126 Emma-Louise Webber More than half of the German spouses in a study by Kupka et al. (2008:1781) indicated that training provided by the enterprise was helpful for their relocation (either to Asia, North America or Western Europe), with just over half of these spouses having received training in the host-country s language. All of the spouses who accompanied expatriates to Western Europe found their intercultural training to be useful for adjustment, compared with 73 percent of spouses on assignment in North America, and 43 percent in Asia. The majority of enterprises included in a study by Shen and Darby (2006:357) failed to provide adequate training for spouses even though they realised its significance with regard to expatriate performance. Moore (2002:66) mentions that almost three-quarters of spouses require crosscultural and language training, whereas only a third actually receive such training. Trailing spouses need for training is emphasised throughout expatriate literature in order to eliminate uncertainty and reduce the chance of premature return. If spouses have received relevant training they will be more confident on their arrival in the host country and should adjust more easily to the culture and customs (Cho et al., 2013:1053; Fischlmayr & Kollinger, 2010:471; Gupta et al., 2012b:18; Jenkins & Mockaitis, 2010:2696; Konopaske & Werner, 2005:1161; Mohr & Klein, 2004:1197; Smart, 2011:64; Vögel & Van Vuuren, 2008:85) Language Training Davidson and Kinzel (1996:113), Fish and Wood (1997:446), Mohr and Klein (2004:1194), and Yu et al. (2005:190) also point out that trailing spouses are more exposed to differences in everyday life than the expatriates, who spend most of their time at the office. These spouses usually become frustrated and anxious, and experience severe culture shock when they are unable to effectively communicate with host nationals. Andreason (2008:388), Fish and Wood (1997:456), Kupka et al. (2008:1766), Mäkelä, Känsälä and Suutari (2011:190), and Rosenbusch and Cseh (2012:73) recommend that spouses receive intercultural communication training to prepare them for more effective interpersonal interaction with HCNs. Basic training in the host language, before departure and during the assignment, will allow spouses to understand the culture, increase their confidence in interacting with host nationals, and aid in their adjustment (Cherry, 2010:140; Lund & Degen, 2010:70; Okpara & Kabongo, 2011:29; Yu et al., 2005:190). However, a study by Stahl (in Kupka et al., 2008:1770) revealed that as few as 10 percent of trailing spouses were given foreign language training, while Davidson and Kinzel (1996:109)

144 found that only 45 percent of families were provided with language training. Studies by Mansour and Wood (2010:387) and Mohr and Klein (2004:1195) found that spouses in general did not receive language training prior to or during the assignment. A host-country language that is different from that of the home country will have a greater impact on the trailing spouse than on the expatriate, as spouses have to interact on a daily basis with locals who are often unaccustomed to dealing with foreigners (Andreason, 2008:386; Ashamalla, 1998:59; Cole, 2012:313; Tung, 1982:65; Wilson, 2011:9). Gupta et al. (2012b:21) found that English-speaking trailing spouses were more at ease when assignments were based in countries with English as their official language. In non-english speaking countries, an inability to understand the local language may cause severe issues as spouses attempt to do their shopping, ask for directions or open accounts (Davidson & Kinzel, 1996:113; Shaffer & Harrison, 2001:238). An inability to speak the host country s language often leads to integration problems and hinders the spouse s ability to become comfortable in the foreign country, find employment, cope with everyday tasks, and to form friendships and create personal contacts with the locals (Ashamalla, 1998:59; Bikos, Çiftçi, Güneri, Demir, Sümer, Danielson, DeVries & Bilgen, 2007:52; Cherry, 2010:137; Mohr & Klein, 2004:1194; Sharma, 2012:16). Kupka et al. (2008:1783), Mohr and Klein (2004:1194), and Shaffer and Harrison (2001:241) found that spouses who acquired a basic knowledge of the foreign language had a more positive experience in the host country, and seemed to adjust more easily than those who did not receive training or made no attempt to learn the language. Fluency in the host language demonstrates an interest in the local culture, whereas a lack thereof often leads to misinterpretations and confusion. Knowledge of the host language helps the expatriate s family cope with everyday tasks and find support from, and build social networks with, host nationals (Ashamalla, 1998:59; Rosenbusch & Cseh, 2012:73; Sharma, 2012:16) Cross-Cultural Training According to Fish and Wood (1997:462), enterprises pay little attention to the cultural disorientation trailing spouses are likely to experience as they are left alone to adapt in a foreign country. This is despite the fact that the need for cross-cultural training for trailing spouses is emphasised throughout expatriate literature (Fischlmayr & Kollinger, 2010:471; Mohr & Klein, 2004:1197; Smart, 2011:64). 127

145 Trailing spouses who receive relevant cross-cultural training are aware of differences in the host country s culture and customs, and will have a mental idea of potential issues they may face on their arrival. This should increase their confidence in the assignment, eliminate uncertainty, and ease their adjustment in the local environment, reducing the chance of premature return (Jenkins & Mockaitis, 2010:2696; Mohr & Klein, 2004:1197; Smart, 2011:90). Whereas preparation provides spouses with a brief outline of the country s characteristics, cross-cultural training involves lectures, presentations and discussions with HCNs to broaden the individual s understanding of and sensitivity to the country and its culture (Tung, 1987:120). Miser (2010:2) stresses the need for cross-cultural training for expatriate spouses prior to and during each stage of the expatriate cycle. MNEs are urged to conduct effective cross-cultural training programmes which compare cultural elements of the home and host countries and identify similarities and differences between the cultures. Such training programmes should focus on various historical, political, economic, religious, cultural, language and lifestyle differences, and also deal with issues spouses may encounter on a daily basis. This should improve their respect for and understanding of the foreign country, societal values and the actions of host nationals, and prevent them from behaving inappropriately, which will in turn improve their adjustment (Black & Gregersen, 1991a:465; Cho et al., 2013:1053; Gupta et al., 2012b:25; Konopaske & Werner, 2005:1161; Kupka et al., 2008:1766; Mohr & Klein, 2004:1197; Shaffer & Harrison, 2001:244; Sims & Schraeder, 2004:76; Tung, 1987:120). According to Harvey and Buckley (1998:110), the degree of cultural intolerance and beliefs in some host countries is so great that women are not permitted to travel unaccompanied, wear slacks or shorts, or drive a car, making it harder for female spouses to adjust in such countries. A study by Vögel and Van Vuuren (2008:85) determined that spouses should receive further cross-cultural training focusing on the subjective characteristics of the host country s culture, which include the country s customs, values and beliefs. In a study by Black and Gregersen (1991a:473), 10 percent of trailing spouses received predeparture cultural training, compared with 25 percent of expatriates, and those spouses that were included received only basic briefings regarding the host environment. Davidson and Kinzel (1996:109) found that 50 percent of expatriate families were given cross-cultural training, whereas a study by Stahl (in Kupka et al., 2008:1770) revealed that only seven percent of spouses were included in cross-cultural training initiatives by the expatriate s 128

146 129 Emma-Louise Webber enterprise. Caligiuri et al. (1999:176) found that spouses who received cross-cultural training (along with the expatriates) found that it benefited them during the adjustment process. Numerous authors (Andreason, 2008:388; Harvey & Wiese, 1998:366; Mäkelä, Känsälä & Suutari, 2011:190; Mohr & Klein, 2004:1195; Shaffer & Harrison, 2001:244) advise enterprises to provide pre-departure and in-country cross-cultural training to trailing spouses, as the greater the cultural differences between the home and host countries, the more difficult it will be for accompanying spouses to adjust, ultimately leading to expatriate failure SUPPORT REQUIREMENTS Support systems in the host country have been proved to help trailing spouses through tough times and to monitor their progress, aiding in their adjustment into the new country (Copeland & Norell, 2002: ; Crowne & Goeke, 2012:10; Harvey & Wiese, 1998b:38; Punnett, 1997:247; Rosenbusch & Cseh, 2012:64). In a study by Moore (2002:66) only 12 percent of spouses, 8 percent of expatriates and 14 percent of HR executives felt that their enterprise s programmes provided adequate support for expatriate spouses and their families. Harris (1993:11) mentions that very few enterprises have formal policies in place that relate to dual-career couples and the struggles they face in terms of spousal employment in the host country. Briscoe et al. (2009:183) discuss the results of a survey by Runzheimer International and ORC. This study revealed that almost 50 percent of enterprises offer some form of support for the expatriate s spouse; 87 percent of these provide assistance only when necessary, and only 13 percent have formal policies regarding trailing spouses. This is supported by McNulty (2012:421), whose study found that only 13 percent of enterprises are interested in improving their expatriates spouse-assistance programmes. Spouses require support during the international assignment in the form of social support networks with other spouses and HCNs, employment assistance, and mentorship programmes in order to enhance their adjustment process and reduce the chance of expatriate failure (Andreason, 2008:389; Black & Gregersen, 1991a:466; Copeland & Norell, 2002:258; Gupta et al., 2012b:18; Harvey & Wiese, 1998b:33; Moore, 2002:63; Punnett, 1997:245) Support Networks According to Copeland and Norell (2002: ), Crowne and Goeke (2012:10), Harvey and Wiese (1998b:38), Long, (2010:242), and Rosenbusch and Cseh (2012:64), social

147 support acts as a buffer between stress and adjustment, by reducing stress levels, aiding trailing spouses (especially women) in coping with change and uncertainty, and improving their physical and emotional well-being. On the other hand, a lack of social support increases spouses feelings of isolation, lowers their self-esteem and results in their feeling lonely and frustrated. This lack of support has been found to cause conflict within the family and inhibit spousal adjustment and expatriate productivity (Andreason, 2008:389; Crowne & Goeke, 2012:10; Harvey, 1997:630; Harvey & Wiese, 1998b:34; Kupka & Cathro, 2007:952; Mäkelä, Känsälä & Suutari, 2011:190; Shaffer et al., 2001:100; Smart, 2011:31). Support from the spouse s friends and family in the home country has been found to ease their anxiety, reduce work-related stress, and to aid in spousal cross-cultural adjustment. Staying connected with friends, family and events in the home country has proved to reduce spousal stress and depression, brought on by their perceived isolation (Crowne & Goeke, 2012:10; Long, 2010:242; Rosenbusch & Cseh, 2012:64; Van der Zee et al., 2005:243). However, a study by Andreason (2008:389) found evidence that in some cases, support from extended family members may actually inhibit adjustment, as trailing spouses who exert more effort in maintaining relationships with their extended family are less likely to focus on forming relationships with host nationals. International assignments have been proved to disrupt established social networks in the spouse s home country (Copeland & Norell, 2002: ). Andreason (2008: ), Gupta et al. (2012b:18), Lauring and Selmer (2010:63), and Shaffer and Harrison (2001:243) found that trailing spouses place high value on peer support, which includes social networks and family structure. Although spouses struggle with leaving their existing networks and family behind, and many are apprehensive about adjusting to the host country, spouses are often curious and excited to meet new people and interact with others from a foreign culture. It has been found that the stronger the spouses social network in the foreign country, the more easily they are able to adjust to the local environment. Trailing spouses are often forced to form a new identity when an expatriate is assigned overseas. A spouse s social identity stems from his or her membership of particular groups during the assignment, and is sustained by a network of interpersonal relationships with host nationals or other trailing spouses. These networks may include international expatriate organisations, communities within the expatriate compound or weekly coffee clubs (Andreason, 2008:389; Gupta et al., 2012b:1; Lauring & Selmer, 2010:61; Rosenbusch & 130

148 131 Emma-Louise Webber Cseh, 2012:63, Shaffer & Harrison, 2001:243). The more culturally different the host culture is from the home country, the more spouses rely on the local expatriate community for support and advice (Kupka & Cathro, 2007:959). Copeland and Norell (2002:260), Fischlmayr and Kollinger (2010:472), Long (2010:178), and Wilson (2011:18) found that private or official networks allowed spouses to get positive feedback and advice, form friendships, and share experiences with like-minded people. Enterprises may establish online social networks (such as expatriate groups on Facebook or LinkedIn) where spouses may interact with, and get advice from, host nationals and other trailing spouses, as well as keep in contact with family and friends back home (Crowne & Goeke, 2012:11). During pre-departure cross-cultural training, expatriates and their spouses may be introduced to repatriated managers and their families, or host-country nationals who are able to share their experiences and provide information on the host country. This may further reduce uncertainty and enable the family to form accurate expectations of the host country (Harvey & Wiese, 1998b:37). When re-entering the home country after the assignment, trailing spouses often experience reverse culture shock; enterprises should provide support groups made up of repatriated expatriates and their spouses (Punnett, 1997:252). Support networks from other expatriate spouses have been known to aid spouses with, and provide valuable information with regard to, schooling, housing and transportation arrangements. Friendships with spouses in similar positions as themselves also alleviate spousal feelings of boredom and redundancy (Copeland & Norell, 2002:267; Punnett, 1997:252). HCNs are able to facilitate the adjustment process of trailing spouses by providing support and help in coping with local bureaucracy, and familiarising spouses with the norms and values of the host country (Black & Gregersen, 1991a:466; Copeland & Norell, 2002:258; Yu et al., 2005:190). According to Copeland and Norell (2002:259), Mohr and Klein (2004:1197), Shaffer and Harrison (2001:244), and Smart (2011:31-32), accompanying spouses who form personal relationships with host nationals gain a deeper understanding of the local culture and customs, and receive feedback regarding appropriate behaviour, which eases their adjustment Employment Assistance Recent trends indicate that the number of dual-career couples sent on international assignments is growing significantly. Enterprise support for these families before, during, and after an assignment is necessary to help minimise their uncertainty and stress (Harvey,

149 132 Emma-Louise Webber 1995:224; Konopaske et al., 2005:408, Mäkelä, Känsälä & Suutari, 2011:188; Wilson, 2011:76). Job and career issues, as well as the absence of career support from the enterprise, create unwanted pressure and stress for trailing spouses (Konopaske et al., 2005:407). Expatriates often turn down international assignments due to the adverse effect the assignment will probably have on their spouse s career, or because spouses may refuse to accompany them as they are committed to their own careers in the home country (Brown, 2008:1019; Cho et al., 2013:1053; Fischlmayr & Kollinger, 2010:458; Harris, 1993:12; Harvey, 1998:309; Konopaske et al., 2005:412; Konopaske & Werner, 2005:1171; Mäkelä, Känsälä & Suutari, 2011:188; Punnett, 1997:244). Moore (2002:63) mentions that 73 percent of dual-career couples considered spousal employment opportunities a major factor when deciding whether or not to accept an assignment. However, only a quarter of spouses report having received career assistance from the enterprise, while more than half would like this support. The same study found that only 13 percent of those spouses who were employed during the assignment were assisted by the enterprise; 24 percent were assisted by their home-country employers; while 44 percent found positions themselves by relying on personal networks and contacts. Harvey (1995:234) states that only 8 percent of enterprises provide trailing spouses with employment opportunities within the enterprise, 35 percent assist the trailing spouse with finding other employment, and 29 percent assist with obtaining the necessary work permits. Kupka and Cathro (2007:960) found that only 10 percent of trailing spouses who were employed in the host country were assisted by the enterprise in their job search, while 85.7 percent of spouses struggled to obtain work by themselves. These statistics support Davidson and Kinzel (1996:109), whose study revealed that assisting trailing spouses with employment in the host country was of little concern to enterprises. Moore (2002:63) and Punnett (1997:245) advise enterprises to provide meaningful career support to spouses, address adjustment and loneliness issues, and facilitate re-entry for spouses into the home country. A lack of meaningful work tends to put pressure on the trailing spouse, which crosses over to the expatriate, affecting his or her work performance. Spouses who give up their jobs to relocate become economically dependent on the expatriate, and as their role changes from an employee to a housewife, they may become annoyed and frustrated (Mohr & Klein, 2004:1193). Unemployed spouses ultimately experience boredom, underload, and a loss of professional status, self-esteem and self-worth, which hinders the expatriate s adjustment, leading to failure (Shaffer & Harrison, 2001:241; Wilson, 2011:38).

150 On the other hand, Andreason (2008:388) and Rosenbusch and Cseh (2012:63) discuss the fact that spouses who do not experience a change in their employment status tend to adjust more easily on an international assignment than those who are required to give up their career or put their careers on hold. Harvey and Buckley (1998:111) mention that governments may restrict the employment of trailing spouses to reduce the influx of workers to the host country. While employment may be feasible, it can take up to 18 months to obtain a visa or work permit. MNEs should therefore assist trailing spouses with obtaining the necessary documentation for work in the foreign country. Enterprises may also aid spouses by: paying further-education expenses or for refresher classes; helping with career planning; providing a position within the enterprise or recommendations; reimbursing them for their career loss, or providing employment alternatives such as community work or spending more time with their children (Konopaske et al., 2005:412; Mäkelä, Känsälä & Suutari, 2011:188; Moore, 2002:65; Punnett, 1997:247; Vögel & Van Vuuren, 2008:85; Wilson, 2011:67; Yu et al., 2005:192) Mentoring Programmes Harvey, Buckley, Novicevic and Wiese (1999:810), Harvey and Wiese (1998b:33), and Miser (2010:5) point out that mentoring programmes conducted before, during and after international assignments have been found to have a significantly positive effect on the spouse s adjustment. Mentoring can be defined as a one-on-one relationship between a mentor with advanced experience and knowledge of the host country and a protégé with little or no experience regarding the foreign environment (Carraher, Sullivan & Crocitto, 2008:1312; Feldman & Bolino, 1999:54; Harvey et al., 1999:808; Harvey & Wiese, 1998b:34-35). According to Harvey et al. (1999: ), Harvey and Wiese (1998b:34-37), Miser (2010:5), and Kupka et al. (2008:1771), mentors provide trailing spouses with counselling, support, and guidance by sharing valuable information about the enterprise and giving feedback regarding appropriate behaviour in the host country, which may improve spousal socialisation and adjustment. Mentoring relieves stress, depression and anxiety, and helps couples during the relocation process with problem solving and adjusting to the cultural norms and beliefs of the new country. Enterprises which provide spouses with access to mentors demonstrate a willingness to support the expatriate and their family while overseas. 133

151 A study by Davidson and Kinzel (1996:109) found that although enterprises provide spouses with relevant training, they do not appear to be concerned with counselling services or the family s adjustment to the community. Moore (2002:65) states that more than half of trailing spouses would like counselling; however, only 16 percent receive it. A majority of the respondents in a study by Selmer and Leung (2003:17) perceived enterprise support in the form of counselling to be less than sufficient. In order to facilitate the adjustment of expatriates and their spouses, Harvey and Wiese (1998b:39) recommend that mentors provide realistic relocation reviews prior to, during and after an international assignment, as set out in Figure 3.1 below. Figure 3.1 Global Expatriation Mentoring Model Source: Harvey and Wiese (1998b:40) According to Harvey and Wiese (1998b:40), this mentoring process follows three phases: 1. Pre-Expatriation Phase Prior to their departure the dual-career couple should receive a realistic preview of the foreign country and any potential issues related to the new culture that may arise during the assignment. During this phase, mentors may also help spouses with logistical matters associated with their relocation. Prior to expatriation, mentors should seek input from 134

152 repatriates and their spouses who have returned from an assignment in the same host country (Harvey et al., 1999:811; Harvey & Wiese, 1998b:40; Miser, 2010:5). 2. During Expatriation During the international assignment, Carraher et al. (2008:1312), Feldman and Bolino (1999:54-55), Harvey et al. (1999:812) and Harvey and Wiese (1998b:41) recommend that trailing spouses have two mentors. While the mentor based at headquarters continues to provide information about the home office and country, a second host-country mentor facilitates the spouse s in-country adjustment. During this period, the host-country mentor should encourage the development of intercultural competences which will allow the spouse to make sense of the new environment and effectively relate to host nationals. 3. After Expatriation MacDonald and Arthur (2005:153) mention that 90 percent of trailing spouses do not receive repatriation support, even though their readjustment into the home country has a significant effect on the expatriate s success. Enterprises should assist spouses with counselling to aid in the adjustment process, and with support as they re-establish the careers they sacrificed for the assignment (MacDonald & Arthur, 2005:153; Moore, 2002:65). In this phase, mentors aid in re-establishing the trailing spouse s career in the home country and accommodating the re-entry of the family. Enterprises may improve future repatriation processes through increased and continuous communication with mentors and repatriated families (Harvey et al., 1999:812; Harvey & Wiese, 1998b:43) CHAPTER SUMMARY Chapter three discussed in detail the theory behind expatriate trailing spouses, including the various issues they are faced with in the host country, and their requirements in terms of preparation, training and support. The adjustment of the trailing spouse is significantly related to the success of an international assignment, making enterprise assistance programmes essential. This chapter began with an overview of the reasons why trailing spouses are the primary cause of expatriate failure, and then delved into the numerous issues they are faced with on their arrival in the host country and throughout the expatriate assignment. 135

153 136 Emma-Louise Webber The key issues faced by trailing spouses were then discussed in depth, with this section focusing on dual-career couples, male trailing spouses and work-family conflict. Dual-career couples struggle in the host environment, as the spouse attempts to find suitable and satisfying work for the duration of the assignment. Visa and permit restrictions, as well as cultural beliefs, may inhibit the spouse s ability to find a position within host-country enterprises. Due to such employment restrictions, expatriate candidates often turn down assignments to avoid the adverse effects such a move may have on their spouse s future career, or spouses may refuse to leave behind the security their current position provides them. The trailing spouse problem worsens when the spouse is male, as men have to cope with additional obstacles that result from gender-role theories and foreign countries societal norms, which see men as the breadwinners of the family. The next issued covered in this section was WFC. Expatriates often struggle to balance work and family while overseas, and as a result may withdraw from the assignment prematurely. WFC manifests itself in the Crossover Theory, with the spouse s stress at home having a considerable effect on the expatriate s work performance, and vice versa. From these key issues, it is clear that the spouse s overseas experience may hamper the expatriate s adjustment and performance, resulting in expatriate failure. Most of Chapter three focused on the preparation, training and support requirements of expatriate trailing spouses prior to, and during the international assignment. Orientation visits provide spouses with a realistic preview of the foreign environment and what life will be like for the duration of the assignment. An in-depth discussion regarding spousal training requirements was then included, specifically centred on language and cross-cultural training initiatives. Intercultural language training will allow spouses to effectively communicate with host nationals, build social networks, understand the culture, and increase their confidence, all of which will ease their adjustment process. Cross-cultural training involves lectures, presentations and discussions with HCNs to broaden the individual s understanding of and sensitivity to the country, its people and its culture. This should prevent them from behaving inappropriately, eliminate their uncertainty and ease their adjustment, reducing the chances of expatriate failure. Chapter three then went on to discuss the support requirements of trailing spouses in terms of social support networks, employment assistance and mentorship programmes. Private or official support networks allow spouses to get positive feedback and advice, keep in contact

154 with friends and family back home, form friendships, and share experiences with like-minded people. As mentioned earlier, spouses struggle with finding suitable employment in the host country. Enterprise assistance may include the creation of a position within the enterprise, recommendations, identifying possible work opportunities, obtaining the necessary work permits or visas, or further education expenses. Spouses who are employed in the host country tend to adjust more easily than those who were required to put their careers on hold. This chapter concluded with a brief discussion on the benefits of enterprise-initiated mentorship programmes. Mentors aid spouses in the adjustment process, by providing realistic previews of the host country prior to their departure and information on the home and host countries during the assignment, and aiding in the reestablishment of the spouse s career on their return. The successful adjustment of an expatriate s spouse is significantly related to the success of an international assignment. The spouse should therefore be included in multinationals preparation, training and support initiatives, in order to reduce the possibility of expatriate failure. The primary focus of Chapter three was then expatriate trailing spouses, the issues they face in the host country, and the assistance they require from the MNE. Expatriate spouses are faced with various issues when they agree to accompany their partner on the assignment. An unhappy spouse has been found to be the most common cause of all forms of expatriate failure, proving enterprise assistance an essential component of a successful international assignment. 137

155 CHAPTER 4 RESEARCH METHODOLOGY 4.1. INTRODUCTION Research is the study of a subject in order to discover new information enabling enterprises to make effective managerial decisions (Dictionary.cambridge.org, [s.a.]); Cooper & Schindler, 2011:4). Business research is the process of planning, acquiring, analysing, and disseminating relevant data, information and insights to decision makers in ways that mobilise the organisation to take appropriate actions that in turn maximise performance (Cooper & Schindler, 2011:4). The Longman Dictionary of Contemporary English [s.a.] defines methodology as the set of methods and principles used when studying a particular subject or when doing a particular kind of work. According to Blumberg et al. (2008:57) and Cooper and Schindler (2011:87-90), the section of a study which describes the methodology used typically covers the following five steps in the research process: Sampling design Research design Data collection Data analysis Limitations As the research design has already been discussed in Chapter 1, this chapter will cover the remaining four sections, as well as provide a brief discussion of the problem statement and research objectives of this study PROBLEM STATEMENT AND OBJECTIVES According to Blumberg et al. (2008:60) and Cooper and Schindler (2011:567), the problem statement explains the need for the research study. The problem is usually presented by a management question, which is then followed by a more detailed set of objectives. 138

156 Problem Statement Expatriate failure can be seen as either underperformance by the expatriate in the host country, the premature return of the expatriate, or repatriate failure on returning to the home country (Briscoe et al., 2009:180; Harzing, 2004:274; Shen, 2005:657; Swarts & Du Plessis, 2007:48; Templer, 2010:1754). According to Yeaton and Hall (2008:75), expatriate failure rates have been known to range between 25 and 70 percent. A study by Briscoe et al. (2009:182) mentions that US failure rates commonly range between 30 and 40 percent, while Hawley (in Swarts & Du Plessis, 2007:48), looking at South African expatriates, found that between 25 and 40 percent of those assigned to a host country return home early. On average, a failed assignment can cost an enterprise two and a half times the expatriate s annual domestic salary including the cost of relocation to their home country (Anderson, 2005:572). A number of studies (Briscoe et al., 2009:182; Carpenter et al., 2007:[5]; Graf & Harland, 2005:46; Yeaton & Hall, 2008:75) have found that enterprises can incur up to US$1.2 million in losses as a result of failed assignments, while Van Aswegen (2008:45) states that expatriate failures amongst executive positions in South African MNEs can cost an enterprise an estimated R1 million per year. Hill (2011:611), Mohr and Klein (2004:1190), and Rosenbusch and Cseh (2012:61) state that expatriates rarely fail due to technical incompetence, but rather because of family and personal issues, concerns regarding the spouse s career, or a lack of intercultural skills that were not addressed by the enterprise during the selection process. Van Heerden and Wentzel (in Van Aswegen, 2008:54) indicate that 62 percent of failed assignments are due to personal reasons (spouse, family and adjustment), emphasising the role of family in the adjustment process. Ali, Van der Zee and Sanders (2003:564), as well as Wu and Ang (2011:2690) state that approximately 80 percent of expatriates take their spouses with them on assignment, while Van Erp et al. (2011a:58) found that 90 percent of all expatriates are accompanied by their partners. Expatriate families confront numerous obstacles in the host country, including, but not limited to, culture shock, isolation, homesickness, healthcare systems, housing, schooling, cuisine, language and gender roles, as well as the higher cost of living (Andreason, 2008:386; Briscoe et al., 2009:185; Mendenhall et al., 1987:331). These obstacles tend to create greater 139

157 stress for trailing spouses than for the expatriate (Andreason, 2008:387; Caligiuri et al., 2009:257; Gupta et al., 2012a:3560; Harvey & Moeller, 2009:280; Van Erp et al., 2011a:75). The spouses tend to be less sheltered from the foreign environment and more exposed to the local culture, yet they are typically excluded from selection and training processes and receive less in-country support from the multinational enterprise (Andreason, 2008: ; Tung, 1982:65; Wilson, 2011:9). The spouse often struggles to adjust overseas and while the expatriate has a sense of belonging at the office, the spouse is left feeling alienated without the social support network that was present in their home country. A survey in 2005 by GMAC and NFTC (quoted by Brown, 2008:1019) showed that 47 percent of candidates withdraw themselves from consideration during a multinational s selection process due to family concerns. This survey is supported by Shell and Solomon (in Els, 2007:23), who indicate that 48 percent of reasons for turning down an international assignment are spouse related. International assignments play a strategic role in the success of any business venture and have become an integral part of multinationals business strategies (Riusala & Suutari, 2004:745; Van Aswegen, 2008:2). The inability or unwillingness of the spouse to adjust in the host environment has been determined to be the primary cause of expatriate failure (Andreason, 2008:382; Brown, 2008:1019; Deen, 2011:11; Shen, 2005:658; Swarts & Du Plessis, 2007:47; Tung, 1981:76). According to Mäkelä, Känsälä and Suutari (2011:186), Miser (2010:1), and Van Erp et al. (2011b:539), successful expatriate assignments are highly dependent on the spouse s ability to adjust in the host country. Spouses should therefore be included in enterprise-provided preparation and training programmes in order to reduce the possibility of expatriate failure. As a result, this study focused in the following research question: What are the preparation, training and support requirements of trailing spouses prior to, and during an international assignment? Research Objectives The research question is broken down further into investigative questions which are restated as hypotheses in order to explain what exactly was planned by the research (Cooper & Schindler, 2011:654). 140

158 A hypothesis specifies who will be studied, in what context they will be studied, and what in particular will be studied (Blumberg et al., 2008:43). According to Blumberg et al. (2008:43), hypotheses serve several important functions: They guide the direction of the study. They identify those facts that are relevant and those that are not. They suggest which form of research design is likely to be most appropriate. They provide a framework for organising the conclusions. The objective of this research is to determine the preparation, training and support requirements of expatriate trailing spouses, in order to improve their adjustment in the host country. As emphasised in previous chapters, unhappy spouses tend to negatively affect the expatriate s work performance, thereby increasing the chance of a failed assignment (Andreason, 2008:390; Moeller, 2009:280; Haslberger & Brewster, 2008:326). The following hypotheses were tested in this study: H1O: H1A: H2O: H2A: H3O: H3A: There is no difference between the preparation required by trailing spouses and the preparation received from the enterprise prior to the assignment. There is a difference between the preparation required by trailing spouses and the preparation received from the enterprise prior to the assignment. There is no difference between the training required by trailing spouses and the training received from the enterprise prior to the assignment. There is a difference between the training required by trailing spouses and the training received from the enterprise prior to the assignment. There is no difference between the support required by trailing spouses and the support received from the enterprise during the assignment. There is a difference between the support required by trailing spouses and the support received from the enterprise during the assignment. 141

159 4.3. SAMPLING DESIGN Sampling can be defined as the process by which researchers select some of the elements in a population (creating a sample) to draw conclusions regarding the entire population. A population is a set of elements about which researchers seek to make deductions, whereas a sample is carefully selected to represent the population. There are several reasons for sampling, including lower costs and greater speed of data collection (Blumberg et al., 2008:69; Bryman & Bell, 2011:170; Cooper & Schindler, 2011: ; Jackson, 2003:58-59) Target Population According to Cooper and Schindler (2011:370), the first question to be answered when securing a sample is What is the target population? The target population consists of those elements about which a researcher wishes to make deductions during the study (Blumberg et al., 2008:237; Bryman & Bell, 2011:170; Cooper & Schindler, 2011:370). The population for this study consisted of spouses of any nationality currently accompanying expatriates sent on an international assignment by multinational enterprises from any country a multinational enterprise referring to any enterprise with operations in more than one country Sampling Method Blumberg et al. (2008:240), Bryman and Bell (2011: ), Cooper and Schindler (2011:369), and Saunders et al. (2009: ) define two sampling methods that can be used: probability sampling and non-probability sampling. Probability sampling is a controlled procedure that assures that each population element is given a known nonzero chance of selection, which reduces the chance of sampling bias. Probability sampling provides estimates of precision and offers the opportunity to generalise one s findings to the population of interest from the sample population. While probability sampling is based on random selection, non-probability sampling is arbitrary and subjective, and when using it samples are chosen with a specific pattern or scheme in mind (Cooper & Schindler, 2011:369). 142

160 Non-probability Sampling Non-probability sampling can be further classified into convenience, purposive and snowball methods. With convenience sampling, researchers are free to choose whomever they wish to form part of their sample, while snowball sampling describes a situation where people who are discovered may or may not be selected, but often refer researchers to suitable candidates. Purposive sampling can be further classified into judgement sampling and quota sampling. Researchers using judgement sampling select their sample based on whether or not they conform to certain criteria. With quota sampling, if a sample has the same distribution of relevant characteristics as the population, then it is likely to be representative of other variables which the researcher cannot control. For example, if a student body is 55 percent female and 45 percent male, the sampling quota would call for sampling students at a 55 to 45 percent ratio (Blumberg et al., 2008:250; Cooper & Schindler, 2011:385). As there was no available sample frame of trailing spouses on international assignments, nonprobability sampling had to be used. In particular, two types of non-probability sampling were used in this study, namely; judgement sampling and snowball sampling. Non-probability judgement sampling was used in this study as sample members were selected based on whether or not they were trailing spouses, of any nationality, currently accompanying an expatriate on an international assignment. Multinationals were contacted and asked to provide contact details of their accompanied expatriates who were currently assigned to an international location. A few of those multinationals who were unwilling to share their expatriates contact details forwarded the details of the study directly to their expatriate population, inviting them to participate in the research. Non-probability snowball sampling, although not initially intended as a sampling method, was also used in this study, as trailing spouses who completed the questionnaire encouraged others within their networks and expatriate compounds to also participate in the research. International relocation enterprises, foreign expatriate organisations, expatriate online forums, and LinkedIn and Facebook groups were also contacted to assist in connecting with potential respondents. These organisations acknowledged the importance of such a study and, in an effort to attract more participants, they made referrals to expatriates to whom they provided services, or shared details of this study and the questionnaire link on their enterprise websites. 143

161 Sample Size According to Blumberg et al. (2008:241), Bryman and Bell (2011:187), and Cooper and Schindler (2011:374), the number of subgroups, rules of thumb, variance within the population, desired precision, and budget considerations determine the size of the sample used if non-probability sampling is chosen. The sample used should be large enough to bear some proportional relationship to the size of the population from which it is drawn. The larger the sample size, and the more representative it is of the population, the easier it is to note significant differences, and the more power the test has to detect and possibly reject the null hypothesis (Salkind, 2012:156). When the survey was closed on 12 March 2015 there were 443 respondents in total who had completed the online questionnaire; however, only 218 of these responses were valid for data analysis DATA COLLECTION Once the research design and sampling design has been finalised, the data collection stage may begin. According to Cooper and Schindler (2011:89), the gathering of data may range from a simple observation at one location to a grandiose survey of MNEs across the globe. Methods for recording raw data include questionnaires, standardised tests, observational forms, or laboratory notes. Data collection generally comprises two phases: a pilot study, often in the form of pretesting, and the main study. Qualtrics, an online questionnaire development program, was used to construct a selfadministered questionnaire which respondents were then able to access online through a link contained in an . The questionnaire was split into three sections: Section A (personal information), Section B (enterprise characteristics), and Section C (preparation, training and support requirements of expatriate trailing spouses). Sections A and B required spouses to provide demographic information (age, gender, employment status, education etc.) while Section C included a number of Likert-scale questions regarding the preparation, training and support requirements identified during the literature study Questionnaire Design When measuring, one usually devises a mapping rule and then translates the observation of property indicants using this rule. Mapping rules each have their own set of underlying 144

162 assumptions about how the numerical symbols correspond to real-world observations (Blumberg et al., 2008:438; Cooper & Schindler, 2011:273). According to Cooper and Schindler (2011:273), mapping rules have four assumptions: 1. Classification: Numbers are used to classify, group, or sort responses. No order exists. 2. Order: Numbers are ordered. One number is greater than, less than, or equal to another number. 3. Distance: Differences between numbers are ordered. The difference between any pair of numbers is greater than, less than, or equal to the difference between any other pair of numbers. 4. Origin: The number series has a unique origin indicated by the number zero. This is an absolute and meaningful zero point. According to Blumberg et al. (2008:440), Cooper and Schindler (2011:274), and Jackson (2003:32-33), the combinations of these characteristics of classification, order, distance and origin provide four common measurement scales that can be used, namely nominal, ordinal, interval and ratio. Table 4.1 Types of Measurement Scales Type of Scale Characteristics of Data Basic Empirical Operation Example Classification (mutually Nominal exclusive and collectively exhaustive categories), but no Determination of equality Gender (male, female) order, distance or natural origin Ordinal Classification and order, but no distance or natural origin Determination of greater or lesser value Doneness of meat (well, medium well, medium rare, rare) Interval Classification, order, distance, but no origin Determination of equality of intervals or differences Temperature in degrees, calendar time Ratio Classification, order, distance, and natural origin Determination of equality of ratios Source: Adapted from Cooper and Schindler (2011:274) Age in years, weight, height, distance, area 145

163 Nominal Scales According to Blumberg et al. (2008:440), Cooper and Schindler (2011:274), and Jackson (2003:32-33), nominal scales are often used in business research. When using a nominal scale you are collecting information on variables that have no numerical properties, and naturally or by design can be grouped into two or more categories that are mutually exclusive and collectively exhaustive. Nominal classifications may consist of any number of separate groups; however, the counting of numbers in each group is the only possible arithmetic operation. The researcher is therefore restricted to using the mode (most frequently occurring value) as the measure of central tendency, while there is no measure for dispersion. Nominal scales have been found to be the least powerful of the four types of data, as they suggest no order or distance relationship and have no arithmetic origin. For this reason, they are used in exploratory work where the objective is to uncover relationships rather than secure precise measurements. In this study nominal scales were used for numerous demographic questions in Sections A and B (see Appendix A) to allow for further research to uncover possible relationships between demographic characteristics and preparation, training and support requirements Ordinal Scales Ordinal scales have classification as well as order characteristics, with variables that can be categorised and the categories then ordered according to rank. Ordinal data require conformity to a logistical postulate, which states: If a is greater than b and b is greater than c, then a is greater than c. From this we can see that an ordinal scale implies a statement of greater than or less than, without stating how much greater or less. Ordinal scales are therefore most commonly used with attitude or preference scales. With this type of data, the most appropriate measure of central tendency is the median (midpoint of distribution), while dispersion is revealed by a percentile or quartile (Blumberg et al., 2008:440; Cooper & Schindler, 2011:274; Jackson, 2003:32-33). Ordinal scales were used in both Sections A and B (see Appendix A) to determine various demographic characteristics of the respondents. Ordinal scales were primarily used in the form of a Likert scale, which makes use of statements rather than questions, prompting respondents to rate their level of agreement with the statement (Blumberg et al., 2008:466; Cooper & Schindler, 2011:299). Respondents gave their opinion in Section C (questions

164 to 47) regarding their various preparation, training and support requirements by rating, on a scale of 1 to 4 (strongly disagree, disagree, agree, and strongly agree), the individual variable s importance for their adjustment, as well as whether or not these variables were provided to them by the enterprise Interval Scales Blumberg et al. (2008:440), Cooper and Schindler (2011:274), and Jackson (2003:32-33) point out that interval scales have the power of nominal and ordinal scales plus one additional strength: distance. Interval scales have classification and order characteristics as well as distance, with the distance between 1 and 2 being equal to the distance between 2 and 3. When using interval scales, one should use the arithmetic mean as the measure of central tendency, while the standard deviation is used to measure dispersion Ratio Scales Ratio scales have classification, order and distance characteristics as well as a natural origin (absolute zero), which indicates an absence of the variable being measured, for example a respondent s age. When conducting business research, ratio scales are used in money values, population counts, distances, return and productivity rates, as well as amounts of time. When using ratio scales, the geometric or harmonic means measure central tendency, while coefficients of variation describe variability (Blumberg et al., 2008:440; Cooper & Schindler, 2011:274; Jackson, 2003:32-33). In this study ratio scales were used in Section A (question 24) (see Appendix A) of the questionnaire to facilitate further research with the purpose of uncovering relationships between demographic characteristics and spouses requirements Structured and Unstructured Responses Response strategies may be structured (closed response) or unstructured (open-ended response), a decision which is dependent on the objectives of the study; the participants knowledge of the topic; or the participants motivation to share their knowledge. Structured response strategies provide respondents with specified alternatives for their answers, in the form of multiple choices, checklists, rating or ranking responses (Cooper & Schindler, 2011: ). For this study, both structured and unstructured response strategies were used in the questionnaire (see Appendix A). 147

165 According to Cooper and Schindler (2011:329), open-ended questions allow participants to record their ideas in their own words in spaces provided in the questionnaire. Upon conclusion of Section C in the questionnaire, respondents were able to record their views on additional preparation, training, or support requirements that had not been previously covered in the questionnaire Testing of the Questionnaire As stated by Blumberg et al. (2008:540) and Cooper and Schindler (2011:89), the datagathering phase of the research process usually begins with pilot testing, although this may be skipped if the project time frame needs to be condensed. A pilot test is conducted to identify weaknesses in the design and instrumentation and in some cases to provide proxy data for selecting a probability sample. Pilot testing uses suggestions from respondents to identify and change confusing, awkward, or offensive questions and techniques. The pilot study should draw subjects from the target population and simulate the procedures and protocols that have been designated for data collection. Pilot testing may be done in the form of pre-testing, where the researcher relies on colleagues, respondent surrogates, or actual respondents to refine a measuring instrument. Pre-testing may be repeated several times to refine questions, instruments or procedures before the actual study is done. Pre-testing and validation of the questionnaire was undertaken using four professionals (An International Business Management lecturer; statistician; research consultant; and language editor) at the University of Pretoria who had all previously been involved in expatriate research, in order to determine whether or not the questionnaire was properly structured and whether or not the questions were easily understandable. Their recommendations were taken into account and all relevant changes were made to the measuring instrument. The questionnaire was then forwarded to four expatriate spouses currently accompanying an expatriate on assignment for further refining, and to see if their situation in the host country affected the way in which they interpreted the questions. The time taken by these trailing spouses to complete the questionnaire was also recorded Response Rate The basic calculation for obtaining a response rate is to count the number of questionnaires returned or completed, then divide this total by the number of eligible people who were contacted or asked to participate in the survey (Zikmund, Babin, Carr & Griffin, 2013:215). 148

166 As no database of MNEs was available, a database containing the contact details of 196 MNEs was constructed. Each MNE was approached by phone in order to determine whether or not they made use of expatriate employees. For those enterprises that employed expatriates, the relevant HR or expatriate manager s name and contact details were recorded and these managers were contacted by telephone (or , depending on availability) to request their assistance with distributing details of the study to expatriate spouses. A followup was sent to each MNE with a research request letter drafted by the University of Pretoria. This letter introduced the researcher and requested assistance from the MNE. Only 17 of these enterprises provided formal consent for their expatriates spouses to partake in the study. Although a few of these enterprises provided their expatriates contact information, the majority preferred to forward the questionnaire information and online link themselves, due to privacy concerns. Apart from the enterprises included in the database, seven private individuals, upon hearing of the research, offered to assist with the distribution of the questionnaire. These individuals were either linked to multinationals or to expatriate-support communities. The link to the online questionnaire was embedded in an that outlined the purpose of the research and provided a brief background to the research problem. This was sent to all expatriates whose contact details had been provided; to enterprises who had given consent to partake in the research; and to those enterprises included in the database that had not expressly declined the research request. Some spouses acknowledged the importance of this study and were eager to forward the link on to their spousal networks. The questionnaire link was also posted on online expatriate forums, LinkedIn groups for expatriates and HR managers, and expatriate communities on Facebook. By 12 March 2015, there were 443 respondents in total who had completed the online questionnaire; however, only 218 of these responses were valid for data analysis. Due to the nature of non-probability judgement and snowball sampling, the researcher was unable to determine the response rate, as it could not be confirmed how many trailing spouses received the link to the online questionnaire Data Preparation According to Cooper and Schindler (2011:402), data preparation includes editing and coding raw data with the purpose of ensuring its accuracy. Responses are converted from raw data 149

167 into reduced and classified data that is ready for analysis. When editing, the researcher is able to detect errors and omissions and correct them wherever possible in order to ensure that maximum data quality standards are achieved. Upon download of the final data, the 443 responses were checked individually. Those responses that had not completed the Likert-scale questions were removed from the spreadsheet. Six responses had many incomplete demographical questions and were also removed. This data preparation stage resulted in the removal of 225 responses from the data downloaded due to incomplete or inappropriate responses Coding Coding involves assigning numbers or other symbols to answers of both closed questions and open-ended questions so that the responses can be grouped into a limited number of categories. Categories can be defined as the partitions of a data set of a given variable; for example, if the variable is gender, the participants are male and female. Although the categorisation of data sacrifices some data detail, it is absolutely necessary for efficient analysis. The researcher s task can be simplified by using numeric coding when converting a nominal variable like gender, to a dummy variable. Instead of using male or female as a response, the researcher would use numeric codes: 0 for male and 1 for female (Cooper & Schindler, 2011:405). In this study, the coding was done electronically once each respondent finished the online questionnaire and submitted the answers. The online survey software, Qualtrics automatically codes respondents answers, enabling the researcher to download the responses in the comma-delimited format into an Excel spreadsheet. This eases the data analysis process and reduces the chance of human error DATA ANALYSIS Cooper and Schindler (2011:90) define data analysis as the process of reducing accumulated data to a manageable size, developing summaries, discovering patterns and relationships between variables and applying statistical techniques. Researchers then need to interpret their findings to determine whether or not the results are in line with their hypotheses. 150

168 Characteristics of Good Measurement According to Blumberg et al. (2008:447), Bryman and Bell (2011:41) and Cooper and Schindler (2011:280), there are three major criteria for evaluating a measurement tool: Validity is the ability of a measuring instrument to measure what it is supposed to measure. Reliability has to do with the accuracy and precision of a measurement procedure. Practicality is concerned with a wide range of factors of economy, convenience, and interpretability Validity Validity can be classified into three major forms: content validity, criterion-related validity and construct validity (Blumberg et al., 2008:447; Cooper & Schindler, 2011: ; Lee & Lings, 2008:170; Page & Meyer, 2005:86; Zikmund et al., 2013: ). Content validity is the extent to which the measuring instrument provides adequate coverage of the investigative questions guiding the study. If the instrument is found to contain a representative sample of the universe of subject matter of interest, then the content validity is good. Judgement is needed when determining content validity. The designer may either determine the items to be scaled and the scales to be used, or a panel of people may judge how well the instrument meets the standards. Criterion-related validity reflects the success of measures used for prediction or estimation; for example, an attitude scale that correctly forecasts the outcome of a purchase decision has predictive validity. An observational method that correctly categorises families by current income class has concurrent validity. All criterion measures must be judged in terms of four qualities 1. A criterion is relevant if it can be defined and scored in terms the researcher judges to be proper measures of success. 2. Freedom from bias is attained when the criterion grants each person an equal opportunity to score well. 151

169 3. A reliable criterion is known to be stable and reproducible. 4. The information specified by the criterion must be available. Emma-Louise Webber Both the theory and the measuring instrument are considered when evaluating construct validity. Construct validity may be further divided into convergent and discriminant validity. Convergent validity measures the degree to which scores on one scale correlate with scores on other scales designed to assess the same construct. Discriminant validity measures the degree to which scores on one scale do not correspond with scores from scales designed to assess different constructs. This was measured using factor analysis. Factor analysis is used for exploration purposes, allowing researchers to detect patterns in hidden variables, discover new concepts and reduce data sizes. The objective of factor analysis is to create a more manageable number of variables from a larger set based on their nature and character. The most common method is principal components analysis, which converts a set of variables into either a smaller representative number of variables, or a completely new set of uncorrelated variables. These combinations of variables account for the variance that is present in the data (Bryman & Bell, 2011:170; Cooper & Schindler, 2011: , Lee & Lings, 2008:363; Zikmund et al., 2013:595). Factor analysis can be classified in two types: exploratory factor analysis (EFA) and confirmatory factor analysis (CFA). EFA is performed when a researcher is uncertain about how many factors may exist within a set of variables, whereas CFA is performed when a researcher has strong theoretical expectations about the factor structure, prior to performing the analysis. CFA tests how well a researcher s theory fits actual observations (Page & Meyer, 2005:196; Zikmund et al., 2013:595), while exploratory factor analysis is a datadriven technique used to develop scales and subscales and to focus hypotheses for confirmatory analysis (Gorsuch, 1997: ). Exploratory factor analysis was used in this study to establish how many factors existed within each construct. The number of factors was then determined by how many factors had eigenvalues greater than one, while each variable was classified under the factor in which it loaded the highest (loadings smaller than were eliminated). 152

170 Reliability As defined by Blumberg et al. (2008:455), Bryman and Bell (2011:157), Cooper and Schindler (2011:283), Jackson (2003:39), Saunders et al. (2009:156) and Zikmund et al. (2013:305), reliability is the extent to which a measuring instrument supplies consistent results. Reliability is concerned with estimates of the degree to which a measurement instrument is free of random or unstable error. It also determines whether the measure will yield the same results on different occasions (deductive approach), and whether similar observations will be made by different researchers on different occasions (inductive approach). For example, if a scale measures your weight correctly, then it is both valid and reliable. If it consistently over-weighs you by six pounds, then the scale is reliable but not valid. However, if the scale measures erratically from time to time, then it is not reliable and therefore cannot be valid (Cooper & Schindler, 2011:283; Lee & Lings, 2008:169). According to Blumberg et al. (2008:455) and Cooper and Schindler (2011: ), there are three perspectives on reliability: stability, equivalence and internal consistency. Stability exists if you are able to secure consistent results with repeated measuring of the same person with the same instrument. Stability measurement in surveys is more difficult and less easily executed than in observational studies. Equivalence is concerned with variations at one point in time among observers and samples of items, and how well a given set of items will categorise individuals. Inter-rater reliability is often used to correlate the observations or scores of the judges and render an index of how consistent their ratings are. Internal consistency is concerned with the homogeneity among items. The split-half technique is often used when a measuring instrument has many similar questions or statements to which the participant may respond. The internal consistency reliability of the measurement tool used in this study was tested using Cronbach s Alpha. The Alpha was developed in 1951 by Lee Cronbach to create a measure of the internal consistency of a test or scale. Internal consistency describes the extent to which all variables in a test measure the same construct (Bryman & Bell, 2007:159; Cooper & Schindler, 2011:284; Lee & Lings, 2008:169; Tavakol & Dennick, 2011:53). 153

171 Cronbach s Alpha is presented as a number between 0 and 1, and tests internal validity by measuring the degree to which instrument items are homogeneous and reflect the same underlying constructs (Bryman & Bell, 2007:164; Cooper & Schindler, 2011:284; Lee & Lings, 2008:169; Tavakol & Dennick, 2011:53). The formula for Cronbach s Coefficient Alpha is as follows (Bland & Altman, 1997:572): α = k k 1 ( 1 s2ᵢ s 2 т ) Where: k is the number of items S²ᵢ is the variance of the ith item S²т is the variance of the total score which is the sum of all the items. If the variables in a test are correlated with each other, the alpha value increases. If the items are identical and perfectly correlated, then the Cronbach s Alpha value will be one. However, if the items are independent then the alpha value would be zero (Bryman & Bell, 2007:164; Tavakol & Dennick, 2011:53). According to Milfont and Gouveia (2006:76), Segù, Collesano, Lobbia and Rezzani (2005:127), and Tappen (2010:131), a Cronbach s Alpha value that is above 0.70 is regarded as an indication of reliability. For the purposes of this study, a minimum Cronbach s Alpha value of 0.70 was taken into account Practicality As stated by Blumberg et al. (2008:459) and Cooper and Schindler (2011: ), practicality can be defined as economy, convenience and interpretability. In terms of economy, more items provide more reliability; however, these also increase costs. The choice of a data-collection method is therefore often dictated by economic factors. In this study the measurement instrument was administered through an online questionnaire program to which access is provided by the 154

172 University of Pretoria. This eliminated for the researcher the financial costs often associated with data collection. A measuring device is convenient if it is easy to administer. In this study respondents around the world were able to access the questionnaire online using a link contained in an . This eliminated the need for paper-based questionnaires and face-to-face interviews, which tend to be more time consuming and difficult to monitor. The online programme also collated the data that was received and gave the researcher the option to download the results in various formats. People other than the test designers should be able to interpret the results. The data for this study was downloaded in the comma-delimited format into an Excel spreadsheet for easy data analysis and interpretation Hypothesis Testing According to Cooper and Schindler (2011:468) and Zikmund et al. (2013:517), the Z test or t- test is used by researchers to determine the statistical significance between a sample distribution mean and a parameter, by indicating the number of standard deviations a score is from the mean. These tests are appropriate when testing hypotheses involving some observed mean against some specified value. The t has more tail area than the normal distribution, as there tends to be a lack of information about the population standard deviation. Although the sample standard deviation is used as a proxy figure, this imprecision makes it necessary to go farther away from 0 in order to include the percentage of values in the t distribution found in the standard normal distribution. When sample sizes approach 120, the sample standard deviation is a good estimate of the population standard deviation; while for sample sizes beyond 120 the t and Z distributions are almost identical (Cooper & Schindler, 2011:468). t-tests compare the means of two groups of data, and can be classified as either independent samples t-test or dependent samples t-test. An independent samples t-test compares the means of two groups of different people (men and women). A dependent one-samples t-test compares the performance of participants in two groups, with the same people used in both groups, to determine the difference between the two population means (in this case, required vs. provided) (Cooper & Schindler, 2011:468; Jackson, 2003:136; Lee & Lings, 2008:356; Saunders et al., 2009:456; Zikmund et al., 2013:535). 155

173 To calculate t, Cooper and Schindler (2011:468) recommend using the following formula when testing hypotheses: Where: X is the measure of central tendency μ is the population parameter s is the sample standard deviation n is the number of items in the sample t = X μ s n An individual dependent-samples t-test was used to compare what was required by trailing spouses in terms of preparation, training and support, with what was provided by their MNEs. A paired t-test was used to test the hypotheses focusing on the preparation required vs. provided and training required vs. provided. However, the support required vs. provided hypothesis could not be tested as the factor analysis found that the two factors making up the Support required construct were different from the two factors making up the Support provided construct Descriptive Statistics According to Cooper and Schindler (2011:425) and Lane (2010:1), the most common measures of central tendency include the mean, median and mode. The mean score (or average response) for each preparation, training and support variable was calculated using the following formula: Where: X is the mean or average n X = i=1 X i is the sum of all the responses n i=1 X i n 156

174 n is the number of responses If the mean score was greater than 2.5 on a four-point Likert scale, where strongly disagree = 1, disagree = 2, agree = 3, strongly agree = 4, then it was deduced that the variable was required by the majority of trailing spouses Inferential Statistics According to Cooper and Schindler (2011: ) and Page and Meyer (2005:167), there are two types of significance tests that are used to test hypotheses: parametric and nonparametric. Parametric tests have greater efficiency and are more powerful, as their data is derived from interval or ratio measurements. On the other hand, nonparametric tests are easier to understand, as they use nominal and ordinal data. While nonparametric tests do not specify normally distributed populations of equality of variance; the following assumptions apply to parametric tests (Cooper & Schindler, 2011:464; Page & Meyer, 2005:167): The observations must be independent. The observations should be drawn from normally distributed populations. The populations should have equal variances. The measurement scales should be at least interval, so that the researcher may use arithmetic operations with them. The following tests were used in this research study: Parametric Tests t-test One-way Analysis of Variance Nonparametric Tests Kruskal-Wallis One-way Analysis of Variance Mann-Whitney U Parametric Tests t-test According to Cooper and Schindler (2011:471) and Page and Meyer (2005:176), twoindependent-samples tests are often used in business research to compare the characteristics 157

175 of one sample with another to determine if they are from the same population. The t-test is used with small sample sizes, normally distributed populations, and the assumption of equal population variances. The formula for this test is as follows: t = (X 1 X 2) (μ 1 μ 2 ) 0 S p 2 ( 1 n n 2 ) Where: X 1 is the mean or average of sample 1 X 2 is the mean or average of sample 2 (μ 1 μ 2 ) is the difference between the two population means S p 2 is associated with the pooled variance estimate: S p 2 = (n 1 1)S (n 2 1)S 2 2 n 1 + n 2 2 n 1 is the number of responses in sample 1 n 2 is the number of responses in sample 2 In this study, the t-test was used to test the statistically significant difference between the following dependent and independent variables: The nature of the assignment (independent variable) and trailing spouses preparation, training and support requirements (dependent variables) Trailing spouses employment status while on assignment (independent variable) and their preparation, training and support requirements (dependent variables) Trailing spouses previous international experience (independent variable) and their preparation, training and support requirements (dependent variables) One-way Analysis of Variance Cooper and Schindler (2011:477), Larson (2008:115), and Page and Meyer (2005:178) define analysis of variance (ANOVA) as a statistical method used to test the null hypothesis that the 158

176 means of several populations are equal. ANOVA breaks down total variability into component parts by using the squared deviations of the variance in order to sum the computation of distances between the individual data points and their own mean or the grand mean. The total deviation is then the sum of the squared differences between each data point and the overall grand mean. This total deviation for a particular data point may be separated into between-groups variance and within-groups variance. The between-groups variance represents the effect of the treatment or factor. The differences of between-groups means imply that each group was treated differently, and that the treatment will appear as deviations of the sample means from the grand mean (Cooper & Schindler, 211:478). The within-groups variance describes the deviations of the data points within each group from the sample mean, which results from random variation and variability among subjects. This is often referred to as error. The test statistic for ANOVA is the F ratio: F = between groups variance within groups variance = mean square between mean square within Where: Mean square between = sum of squares between degrees of freedom between Mean square within = sum of squares within degrees of freedom within If the null hypothesis is true, there will be no difference between the population means, and the ratio should be close to 1. If the population means are not equal, the numerator should manifest this difference and the F value should be greater than 1. The F distribution determines the size of ratio necessary to reject the null hypothesis for a particular sample size and level of significance. 159

177 In this study, ANOVA was used to test the statistically significant difference between the following dependent and independent variables: Whether or not trailing spouses had previously accompanied an expatriate on an assignment (independent variable) and their preparation, training and support requirements (dependent variables) Nonparametric Tests Kruskal-Wallis One-way ANOVA The Kruskal-Wallis test is a one-way ANOVA by ranks and is used when data is collected on an ordinal scale. This test may also be used for interval data that do not meet F test assumptions, that cannot be transformed or for another reason prove to be unsuitable for a parametric test. The Kruskal-Wallis test assumes random selection and independence of samples and an underlying continuous distribution (Cooper & Schindler, 2011:484; Page & Meyer, 2008:175). Data is prepared by converting the ratings or scores into ranks for each observation that is to be evaluated. The ranks range from highest to lowest of all data points and are tested using the formula below to decide whether or not they are samples for the same population (Blumberg et al., 2008:672; Cooper & Schindler, 2011:675): H = k 12 N(N + 1) T j 3(N + 1) n j j=1 2 Where: T j is the sum of ranks in column j n j is the number of cases in jth sample N = w j and is the total number of cases K is the number of samples 160

178 In this study, the Kruskal-Wallis test was used to test the statistically significant difference between the following dependent and independent variables: Trailing spouses level of education (independent variable) and their preparation, training and support requirements (dependent variables) Trailing spouses involvement in the selection process (independent variable) and their preparation, training and support requirements (dependent variables) The length of time between selection and departure (independent variable) and trailing spouses preparation, training and support requirements (dependent variables) The host continent (independent variable) and trailing spouses preparation, training and support requirements (dependent variables) Whether or not trailing spouses had previously been assigned to an expatriate assignment themselves (independent variable) and their preparation, training and support requirements (dependent variables) Expatriates position within the enterprise (independent variable) and the trailing spouses preparation, training and support requirements (dependent variables) The MNE s head office location (independent variable) and trailing spouses preparation, training and support requirements (dependent variables) The size of the MNE (independent variable) and trailing spouses preparation, training and support requirements (dependent variables) Mann-Whitney U Test According to Blumberg et al. (2008:670) and Cooper and Schindler (2011: ), the Mann-Whitney U test is an alternative to the t-test without the t-test s assumptions, and can be used with two independent samples if the data are at least ordinal. To calculate the U test all observations should be treated in a combined fashion and ranked from smallest to largest; the rank values for each sample are then totalled and the U statistic is calculated as follows: 161

179 U = n 1 n 2 + n 1(n 1 + 1) 2 R 1 or U = n 1 n 2 + n 2(n 2 1) 2 R 2 Where: n 1 = number of responses in sample 1 n 2 = number of responses in sample 2 R 1 = sum of ranks in sample 1 R 2 = sum of ranks in sample 2 By using both of the above calculations, one can calculate two U values (one using R 1 and one using R 2 ); however, for testing purposes, the researcher should always use the U with the smaller value (Blumberg et al., 2008:670; Cooper & Schindler, 2011:674). In this study, the Mann-Whitney U test was used to test the statistically significant difference between the following dependent and independent variables: Trailing spouses gender (independent variable) and their preparation, training and support requirements (dependent variables) SUMMARY The demographic profile of the sample was created using the responses to Section A of the measuring instrument. A factor analysis was then conducted to determine if each of the constructs (Preparation, Training and Support) represented a single or multiple factors, after which the reliability of the measuring instrument was tested using Cronbach s Coefficient Alpha. An individual dependent samples t-test was used to determine the difference between what was required by trailing spouses and what was provided by the enterprise. A paired t-test was then conducted to test the preparation and training hypotheses; however, the Support required 162

180 vs. provided hypothesis could not be tested, as the factor analysis found that the two factors making up the Support required construct were different from the two factors making up the Support provided construct. The mean score was used to determine whether or not the majority of spouses required each variable and to rank the variables in order of importance. Lastly, the data analysis stage was completed by conducting various significance tests to determine whether or not there were statistically significant differences between trailing spouses preparation, training and support requirements depending on certain demographic characteristics. The results of the data analysis stage will be discussed in the following chapter. 163

181 CHAPTER 5 ANALYSIS AND INTERPRETATION OF RESULTS Emma-Louise Webber 5.1. INTRODUCTION This chapter will include an analysis and interpretation of the results of the empirical research findings. The results of this empirical study will be presented as a description of the sample in terms of the trailing spouses demographical information drawn from the online questionnaire. This will be followed by a factor analysis and a reliability test using Cronbach s Alpha. The chapter will conclude with findings from the t-test, paired t-test, an analysis of the mean scores and inferential statistics DEMOGRAPHIC PROFILE OF THE SAMPLE Section A of the online trailing spouse questionnaire focused on the demographic information of the respondents, particularly the spouses personal characteristics and assignment details. Section B consisted of four questions; all related to the expatriates enterprise. These demographic results are discussed in the sections below Age Profile of Respondents Table 5.1 represents a grouped frequency distribution of the ages of the respondents. Of the 218 trailing spouses who responded to the survey, 29 chose not to indicate their age. The ages of the remaining 189 respondents ranged from 22 to 67 years of age. The majority of respondents, however, fall between the ages of 41 and 50 (40.7 percent of the sample), 26.5 percent of respondents were between the ages of 31 and 40, with only 3.7 percent being over the age of 61. The findings of this study are supported by Blakely, Hennessy, Chung and Skirton (2014:74), who found that the majority of trailing spouses in their study were between 40 and 49 years of age. However, in a study by McNulty (2012:423), it was found that the majority (46 percent) of trailing spouses were between the ages of 30 and 39, while 31 percent fell within the 40 to 49 age group, and only 2 percent of respondents were over the age of

182 Table 5.1 Age Profile of Trailing Spouses Age Group Frequency Percent Valid Percent Cumulative Percent years years years years years Total Missing Total Figure 5.1 Age Profile of Trailing Spouses 16.90% 3.70% 12.20% 26.50% years years 40.70% years years years Gender Representation of Trailing Spouses Figure 5.2 below graphically depicts the gender of trailing spouses included in this study; 8.3 percent of the respondents were male, while the remaining 91.7 percent were female. 165

183 Figure 5.2 Gender Representation of Trailing Spouses 8.3% 91.7% Male Female The results of this study are supported by a number of other studies where it was found that the number of trailing spouses who were female ranged between 89.3 percent and 95 percent (McNulty, 2012:423; Blakely et al., 2014:74; Wiese, 2010:9; Van Erp et al., 2011a:64). It is interesting, however, to note that despite the high percentage of female trailing spouses, Andreason (2008:386) maintains that the number of male accompanying spouses is on the rise Education Level of Respondents From Table 5.2 it can be seen that 93.5 percent of trailing spouse had a tertiary qualification (any type of learning after Matric.), with 70 percent holding either a bachelors or postgraduate degree. Other studies in which respondents had a high level of education include McNulty (2012:428), who found that 84 percent of trailing spouses had either a tertiary or college education, and Van Erp et al. (2011a:64), who found that 74.8 percent of expatriate spouses had completed an education at university level or higher. 166

184 Table 5.2 Education Level of Respondents Education Level Frequency Percent Valid Percent Cumulative Percent Lower than Grade Grade Certificate Diploma Bachelor s Degree Postgraduate Degree Total Missing Total Nature of the Assignment When looking at Figure 5.3 one can see that 56 percent of the respondents in this study were selected for an international assignment by the MNE (enterprise initiated), while 44 percent made the decision themselves (self-initiated) to relocate to another country within the same enterprise. This is supported by Biemann and Andresen (2010:436), who conducted a study on German expatriates which found that more assignments were initiated by the enterprise than by the expatriate. This is, however, contradicted by Doherty et al. (2011:601), who found that 65 percent of expatriates in their study (from diverse nationalities) went on their own initiative. According to Biemann and Andresen (2010:442), self-initiated expatriates can be seen as truly global employees, as they have a high willingness to move to other countries and enjoy being relocated to many different places. Self-initiated expatriates also tend to stay longer in the host country and have a greater need to integrate into the local environment than expatriates who are sent on assignment by the MNE (Biemann & Andresen, 2010:435; Doherty et al., 2011:606). 167

185 Figure 5.3 Self-initiated versus Enterprise-initiated Assignments 44% 56% Self-initiated Enterprise-initiated Extent of Spouses Involvement in the Selection Process Due to the fact that spouses are critical to the success of an expatriate assignment, it is important for enterprises to take their needs into consideration and involve them throughout the expatriation process (Copeland & Norell, 2002:257; Fischlmayr & Kollinger, 2010:478). Considering this, it is interesting to note that 51.6 percent of the respondents in this study were not included in the selection process at all, as can be seen from Figure 5.4 below. According to Andreason (2008:391) and Brett and Stroh (1995:417), enterprises are reluctant to include spouses during the interview and selection process, despite the fact that managers who are best prepared for their assignments are those who have the support of their spouses. This also seems to be the case in this study, as 37.3 percent of respondents were partially included, while only 11.1 percent felt that they had been included fully in the selection process. 168

186 Figure 5.4 Extent of Spouses Involvement in the Selection Process 37.3% 11.1% 51.6% Not at all To some Extent Completely Accompanying Children When looking at Figure 5.5, one can see that 106 of the respondents in this study (48.6 percent) had children of school-going age, of which 103 (98.1 percent) indicated that these children were accompanying them on the assignment. These findings are similar to those by Van Erp et al. (2011a:63), who conducted a study on 103 expatriate couples, of which 55.3 percent had children under the age of 18. Van Erp et al. (2011a:63) found that all but one of these children were accompanying their parents in the host country. Of those children in the study who were not accompanying their parents, one was in Matric, and felt that the school year would be too complex a one in which to move countries; while another spouse had decided that it would be best for her children to attend boarding school, as they were to be transferred to another country in the near future. One of the spouses whose children were in school did not answer the follow-up question regarding why their school-age children were not accompanying them. The finding that 47.2 percent (or 103 spouses) of the 218 respondents have children accompanying them on the assignment mirrors the study by Brookfield Global Relocation Services (2010), which found that 47 percent of expatriates take their spouses and children with them. In a more recent study, Brookfield Global Relocation Services (2012) found that 43 percent of all expatriates have their children accompanying them on an international assignment. 169

187 Figure 5.5 Children of School-going Age and Accompanying Status Yes No Accompanying Not Accompanying Not indicated Length of Time between Selection and Departure As can be seen in Table 5.3 and Figure 5.6, the majority of spouses (75.5 percent) departed for the assignment within six months of the expatriate s selection. Of interest is the fact that one of the spouses had to leave their home country only two days after the process was finalised, while another spouse had only ten days between selection and departure. Table 5.3 Length of Time between Selection and Departure Departure Time Frequency Percent Valid Percent Cumulative Percent Less than 1 month months months months or more Total Missing Total

188 Figure 5.6 Duration of Time between Selection and Departure Less than 1 month 1-6 months 7-12 months 13 months or more Trailing Spouses Host Continent As can be seen from Table 5.4, the 218 respondents were assigned to six different continents (52 different countries), Asia being the most common continent, represented by 40.6 percent of the respondents, followed by Africa with 35 percent. Büthe and Milner (2008:741,757) and Scullion, Collings and Gunnigle (2007:310) discuss the fact that the concentration of FDI by multinationals (traditionally focused on developed countries) has recently shifted to developing countries, particularly in East Asia. The growth of such emerging markets has increased the demand for expatriate employees in these countries. According to Dörrenbächer and Geppert (2010:603), Edström and Galbraith (1977:253) and Gong (2003:737), filling positions is an important function of expatriate employees, especially in developing countries, where qualified local nationals are less likely to be available. Figure 5.7 provides a graphical illustration of the dispersion of respondents across the globe. Malaysia was the most common host country, with 33 trailing spouses, followed by the United Arab Emirates (UAE) with 20, South Africa with 16 and the US with 12. On the other hand, a study by Biemann and Andresen (2010:436) included expatriates from 33 host countries, and found China to have the highest percentage of expatriates. These findings 171

189 differ from those of McNulty (2012:423), who found Europe to be the most common hostcountry region. Table 5.4 Trailing Spouses Host Continent Continent Frequency Percent Valid Percent Cumulative Percent Africa Asia Europe North America Oceania South America Total Missing Total

190 Figure 5.7 Graphical Illustration of the Dispersion of Trailing Spouses on Assignment across the Globe Cayman Islands UAE Sri Lanka Malaysia St. Helena Island Mauritius Tonga 173

191 Trailing Spouses Employment Status Prior to the Assignment Emma-Louise Webber Figure 5.8 shows that 159 respondents (72.9 percent) included in the study were employed in their home countries prior to the expatriate assignment. This is consistent with findings from the study by McNulty (2012:428), who found that 79 percent of spouses had had a career prior to relocating to the host country. On the other hand, Lauring and Selmer (2010:61) discuss a study that found that 54 percent of spouses were employed prior to the assignment, while Haslberger and Brewster (2008: ) found that 60 percent of trailing spouses were employed before the international assignment. Although the findings of the latter two are inconsistent with those of this study and those of McNulty (2012:428); they emphasise the fact that the majority of spouses were employed prior to the expatriate assignment. Figure 5.8 Employment Status of Expatriate Trailing Spouses Prior to the Assignment Employed Unemployed As can be seen from Table 5.5, 23.1 percent of those trailing spouses who were employed prior to the assignment held middle-management positions, while 16.7 percent were in top management positions. As shown in Figure 5.10, of these spouses who were employed prior to the assignment, 18.1 percent were employed in the professional, scientific and technical industry; 17.4 percent in education, and 11.6 percent held positions within the human health and social work industry. 174

192 Table 5.5 Spouses Position in their Home-country Enterprise Level Frequency Percent Valid Percent Cumulative Percent Administration First-line management / Supervisor Middle management Top management / Executive Other (Self employed, teacher etc.) Total Missing Total Figure 5.9 shows that the majority (67 respondents or 42.1 percent) of respondents who were employed prior to the expatriate assignment had had between five and ten years working experience in their respective industries. Figure 5.9 Spouses Years of Experience in the Industry Less than 5 years years years years years More than 25 years 175

193 Figure 5.10 Trailing Spouses Industry of Employment Prior to the Assignment Agriculture, Forestry and Fishing Mining and Quarrying Manufacturing 5.2 Electricity, Gas, Steam and Air-Conditioning Supply Water Supply and Waste Management Construction Wholesale and Retail Trade Transportation and Storage Accommodation and Food Services 0 Information and Communication 6.5 Financial and Insurance Activities 9.7 Real Estate Activities 1.9 Professional Scientific and Technical Activities 18.1 Administrative and Support Service Activities 4.5 Public Administration and Defence 2.6 Education 17.4 Human Health and Social Work Activities Arts, Entertainment and Recreation Other (Makeup, Purchasing, Relocations, Automation)

194 Trailing Spouses Employment Status while on Assignment Emma-Louise Webber When looking at Figure 5.11, one can see that only 20.6 percent of the respondents (45 spouses in the sample of 218) were employed while on assignment. This supports a study by Haslberger and Brewster (2008: ) who found that only 21 percent of spouses were employed during the assignment, while Van Erp et al. (2011a:64) found that only 24.3 percent were employed in the host country. Furthermore, of the 24.3 percent who did have paid jobs, only 8 respondents worked full time, and most of them felt that their work was below their education level. These findings are contested by McNulty (2012:428) who found that despite their education level, only 36 percent of spouses were able to find suitable employment in the host country due to visa and work permit restrictions. This lack of dualcareer support led to deep resentment for their having sacrificed their jobs to support their partner s career. Figure 5.11 Spouses Employment Status while on Assignment Employed Unemployed Trailing Spouses Employment Status prior to the Assignment versus Status during the Assignment As can be seen in Figure 5.12 below, only 31 (19.5 percent) of respondents who were employed prior to the assignment were also employed in the host country, and only four of these were employed by the same enterprise in both cases. Wiese (2013:3) refers to a 2011 report by Brookfield Global Relocation Services, which reported similar results; of the 60 percent of spouses who had been employed prior to the assignment, only 12 percent were employed in the host country. 177

195 Figure 5.12 Employment Status Prior to the Assignment Compared with Employment Status in the Host Country 31 Employed Prior to Unemployed Prior to Employed during Assignment Unemployed during Assignment Spouses Previous International Experience When looking at Figure 5.13, one can see that 98 of the accompanying spouses had previously lived outside of their home country, but not on an official expatriate assignment. Of those 98 respondents who had had previous international experience, 47 felt that this experience had definitely assisted them to adjust better to their partner s current assignment; 45 felt that it had assisted them to some extent; while only 6 felt that it did not help them at all. Figure 5.13 Trailing Spouses Previous International Experience and its Assistance with Current Adjustment Previous Experience No Previous Experience No, not at all To some extent Yes, definitely 178

196 One spouse who felt that her experience had been beneficial mentioned that if she had not backpacked for 18 months and become self-reliant, she would not have coped with the trailing-spouse experience. Another mentioned that they had a lot more time together as a family in the host country, which aided in their adjustment. Two of these spouses had knowledge of the host culture, as they had either been born in the host country or had travelled as a child, due to their parents jobs. Those respondents (two spouses) who had previously lived abroad because they wanted to travel (and not because they had to) found it easier to adjust to a new country. A few respondents (three spouses) who said that their previous experience had definitely assisted them with their current assignment acknowledged that one s first expatriate assignment is a steep learning curve, and that even though each move is uniquely difficult, the more overseas experience you have, the easier the adjustment process becomes. Of those spouses who indicated that their previous international experiences had, to some extent, assisted them with their current assignment, one had lived abroad as a child, another had lived in six different countries, while another pointed out that the couple had not had children at the time of previous moves, which had made adjustment easier; travelling alone as a couple and then as a family is quite different. One of the respondents mentioned that they were now able to cope with the distance from family and friends, as they had dealt with it before. Two of the respondents explained that they struggled to adjust because they were not currently employed in the host country. One stated: In other experiences of living abroad, I had gone to the country to work and so my activities were structured by my employment. Being a trailing spouse is harder to adapt to, as you do not have the structure that a job provides in adapting to a new place. A statement from a male trailing spouse: Last time I accompanied my wife to France for two years, but it was when she was a student. Living and working in the country has been a totally different and more arduous experience. Of the six respondents in this study who felt that their previous experience had not assisted in their adjustment, one attributed this to the fact that she had been studying and they did not have children at the time. The following quote from another respondent summarises the difference between her previous international experience and being a trailing spouse: Relocating and being in control of one's own destiny and purpose is very different to being a trailing spouse. 179

197 According to Andreason (2008:385), previous international experience reduces culture shock and facilitates one s adjustment in the host country. This is because experience enables one to develop relocation skills, which reduce the uncertainty associated with such a move. Trailing spouses included in a study by Bikos et al. (2007:43) described their previous international experience as the best preparation for moving to the host country Previous Expatriate Experiences As can be seen from Figure 5.14, 102 spouses had previously accompanied their partners on single or multiple assignments, and 31 had themselves previously been assigned to one or more expatriate assignments. Figure 5.14 Trailing Spouses Previous Expatriate Experience Never Once More than once Accompanied Expatriate Spouses themselves assigned as Expatriates Of the respondents who had had some form of previous expatriate experience (either assigned as an expatriate themselves or previously accompanying an expatriate), six felt that this had not helped them at all with their adjustment to the expatriates current assignment, as can be seen in Figure 5.15 below. Three of these spouses had accompanied their partners on more than one expatriate assignment, and two of these had themselves also been assigned to multiple expatriate assignments. 180

198 Figure 5.15 Trailing Spouses Previous Expatriate Experience and its Assistance with Current Assignment Adjustment No, not at all To some extent Yes, definitely Note: The figure above does not represent the full sample of spouses who had previous expatriate experience (110 spouses), as three did not complete the follow-up question on whether or not this experience had assisted them with adjusting to their current assignment. Many of the 56 spouses who felt that their previous expatriate experience had definitely assisted them stated that even though the transition was difficult; previous experience made adjustment easier. These spouses knew how the relocation process worked; they were aware of the positives and negatives of an expatriate assignment, understood the inevitable frustrations and difficulties, and were able to cope with packing up their household and leaving behind their friends and family. The first assignment is the toughest as it is such a steep learning curve. The next assignment is a bit easier if the host country does not pose any extra or unexpected stressors. Of the 51 spouses who felt that their previous expatriate experience had either assisted to some extent or not at all with their adjustment; being a full-time expatriate wife was one of the most common reasons why spouses struggled to adjust. Taking on the housewife role was difficult, especially for those trailing spouses who had been employed in previous host countries. The following quote is from a spouse who had not only accompanied her partner on an expatriate assignment but had also been an expatriate manager herself. She felt that neither of these experiences had assisted her at all with her adjustment to the current assignment: I think that women are generally expected to just accept a secondary role and make compromises to support their partner's career. When I relocated with my own 181

199 employer, my husband would never have been expected to stay at home and we would not have gone to a country where he couldn't work or pursue his career Trailing Spouses Duration of Time Living in the Host Country Short-term assignments usually last for a period less than three months; extended assignments can last up to a year; while long-term expatriate assignments typically last from two to five years (Konopaske & Werner, 2005:1161; Stroh et al., 2000:681). According to Doherty et al. (2011:596) and Thomas (in Els, 2007:11), expatriate managers are usually accompanied by their families on international assignments, which typically last for a period of three to five years. As can be seen from Table 5.6, 14.3 percent of spouses had been in the host country for less than 6 months, while 17.1 percent of respondents had been in the host country between 6 and 12 months, 26.8 percent of spouses had been in the host country for a period of between 13 and 24 months and 41.9 percent of respondents for more than two years. Table 5.6 Time Elapsed Since the Start of the Current Assignment Time in months Frequency Percent Valid Percent Cumulative Percent Less than 6 months months months months months months More than 36 months Total Missing Total

200 Figure 5.16 Time Elapsed Since the Start of the Current Assignment Less than 6 months 6-12 months months months months months More than 36 months Level of Adjustment in the Host Country As can be seen from Figure 5.17, the majority of spouses (42.7 percent) felt they had adjusted, followed by 27.5 percent who felt highly adjusted in their host countries, while 23.9 percent said they were coping. Of the nine spouses who felt highly unadjusted, three had been living in the host country for 12 months or less, three for a period of 13 to 24 months, one for 30 months; the remaining two spouses had lived in the country for more than three years (37 months in Canada and 6 years in the UAE respectively). Three of the four spouses who felt unadjusted had been living in the host country for less than one year (two of these for one month or less), while the fourth had resided in the host country for three years. 183

201 Figure 5.17 Spouses Level of Adjustment in the Host Country 4.1% 1.8% 27.5% 23.9% Highly Unadjusted Unadjusted Coping Adjusted Highly Adjusted 42.7% The Lysgaard U-Curve theory explains an expatriate s level of adjustment as a function of time in the host country. According to this theory, expatriates and their families gradually start to recover from the initial culture shock and begin to accept and adjust to the cultural differences around the four- to six-month mark. According to this theory, expatriates and their families can take between four and twenty-four months to feel adjusted (Black & Mendenhall, 1991:226; Church, 1982:541; Littrell et al., 2006:364; Thomas in Els, 2007:12). Spouses in this study who felt adjusted or highly adjusted to the host country were asked to indicate how long it took them to feel this way. As can be seen from Table 5.7, the majority of respondents (36.6 percent) took between three and six months to feel adjusted, followed by 30.3 percent who took seven to 12 months; with only six spouses taking longer than two years. With 84.8 percent of trailing spouses feeling adjusted after 12 months in the host country, these adjustment periods are slightly shorter than those in Lysgaard s U-Curve theory. 184

202 Table 5.7 Length of Time to Feel Adjusted Length of Time Frequency Percent Valid Percent Cumulative Percent Less than 3 months months months months months Longer than 24 months Total Missing Total Spouses Proficiency in the Host Language Prior to the Assignment As shown in Table 5.8, 51.4 percent of respondents were unable to speak the host language at all prior to departure, 11.1 percent had a limited proficiency and only 22.7 percent were able to speak, read and write the language fluently. This is of concern, considering that Bikos et al. (2007:51) found that language training was the most important aspect of preparation for expatriate spouses. Spouses depend more on their skills and ingenuity than the expatriate, as they often deal directly with host nationals who cannot speak their language or who have not met foreigners before (Andreason, 2008:387). Spouses who have acquired at least a basic repertoire in the host language have been found to have a more positive experience during the assignment than those who made no effort to learn the host language (Andreason, 2008:387). 185

203 Table 5.8 Proficiency in the Host Language Prior to the Assignment Understanding Frequency Percent Valid Cumulative Percent Percent Could not speak the language at all Could speak and understand the language in a very limited way Could understand the language used in everyday situations Could communicate in a range of everyday social and travel contexts Could speak the language with confidence Could use the language in a range of culturally appropriate ways Could speak, read and write the language with fluency and ease Total Missing Total Expatriate s Position within the Enterprise From Table 5.9 and Figure 5.18, it can be seen that the largest number of expatriates represented in this study were in top management positions (58.3 percent), followed by middle management on 27.5 percent. This is supported by other studies which found that the majority of expatriates were working in management positions (Bhanugopan & Fish, 2006:458; Bhaskar-Shrinivas, Harrison, Shaffer & Luk, 2005:264). The figures in Table 5.9 indicate that 85.8 percent of expatriates held middle or top management positions, which is in line with a study by Vogel (2006:140), who found that percent were in middle management positions or higher. A study by Harvey (1995:234) found that there was a significant difference between the support provided to trailing spouses of supervisors and that provided to the spouses of their middle-management counterparts. The results indicated that there was a high degree of 186

204 support provided to spouses of executive and middle managers, while spouses of expatriates at a supervisory level were found to receive 50 percent less assistance during the assignment. Table 5.9 Expatriates Position within the Enterprise Position Frequency Percent Valid Percent Cumulative Percent Administration First-Line Management / Supervisor Middle Management Top Management / Executive Other (Scientist, Freelancer, Teacher, Analyst) Total Figure 5.18 Expatriates Position within the Enterprise

205 Head Office Location From Table 5.10 it can be seen that a large portion (35.4 percent) of enterprises by which these trailing spouses partners were employed were based in Europe. Of the expatriates, 23.4 percent had been assigned by enterprises with their headquarters in North America, and 22.5 percent by enterprises headquartered in Africa. Table 5.10 Location of the Enterprise s Head Office Location Frequency Percent Valid Percent Cumulative Percent Africa Asia Europe North America Oceania South America Total Missing 9 4 Total Figure 5.19 Location of the Enterprise s Head Office Africa Asia Europe North America 30 Oceania South America

206 Size of the Multinational Enterprise As can be seen from Table 5.11, 116 (54.2 percent) of the respondents were accompanying expatriates who had been assigned by an enterprise with more than 5000 employees, while only 6 respondents (2.8 percent) were accompanying expatriates employed by enterprises with fewer than 50 employees. Table 5.11 Size of the Multinational Enterprise in Employee Numbers Number of employees Frequency Percent Valid Percent Cumulative Percent Fewer than More than Total Missing Total

207 Figure 5.20 Size of the Multinational Enterprise in Employee Numbers Expatriates Industry of Employment Expatriate employees whose accompanying spouses took part in this research worked across 18 industries, as shown in Table 5.13 and Figure Of these expatriates, 15.2 percent worked in the mining and quarrying industry, while 10.1 percent worked in the professional, scientific and technical industry, followed by 9.2 percent in manufacturing as well as in the financial and insurance industries. 190